transform!european journal for alternative thinking and political dialogue

04/2009

Finance • Economy • Ecology • Politics …

Crisis, Crisis, Crisis!

Impressum: transform! european journal for alternative thinking and political dialogueEdited by transform! Europe, BrusselsEditors: Walter Baier (V.i.S.d.P.), Eric Canepa, Elisabeth Gauthier & Rosa ReitsamerPhotgraphs by: Emanuelle Reangot

transform! 30 Rue Parnasse, 1050 Brussels, BelgiumPublisher: Karl Dietz Verlag Berlin GmbH, Franz-Mehring-Platz 1, 10243 BerlinTel.: 0049 30 29784533, Fax: 0049 30 29784536e-mail: info@dietzberlin.de

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Coverdesign by kind permission of vvlbbdo - Campaign of the Belgian Coalition for Decent Work

AAggrraarriiaann NNeeooccoolloonniiaalliissmm:: FFeeeeddiinngg PPeeooppllee WWiillll bbee OOnnee ooff tthhee GGrreeaatt BBaattttlleess 160ooff tthhee 2211sstt CCeennttuurryyJohn Neelson

TThhee DDaannggeerrss aanndd OOppppoorrttuunniittiieess ooff tthhee GGlloobbaall CCrriisseess 166Gustave Massiah

World Social ForumTThhee WWoorrlldd SSoocciiaall FFoorruumm CCaallllss ffoorr UUrrggeenntt AAccttiioonn AAggaaiinnsstt tthhee CCrriissiiss 180João Romão

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AA CCaallll ffoorr aa NNeeww SSoocciiaall NNeettwwoorrkk ffoorr LLaabboouurr aanndd GGlloobbaalliissaattiioonn 193Gian Franco Benzi

CCrriissiiss aanndd tthhee NNeeww IInntteerrnnaattiioonnaalliissmm 196Christophe Ventura

AAccttiivviittiieess ooff tthhee IInntteerrnnaattiioonnaall FFrraannttzz FFaannoonn NNeettwwoorrkk aatt tthhee AAffrriiccaann SSoocciiaall FFoorruumm 199International Frantz Fanon Network

ChroniclesAA VViissiitt ttoo tthhee GGaazzaa SSttrriipp 206Luisa Morgantini

TThhee CCrriissiiss aanndd tthhee SSoocciiaall MMoovveemmeenntt iinn FFrraannccee 212Maryse Dumas in an interview with Elisabeth Gauthier and Dominique Crozat

PPooppuullaarr MMoovveemmeennttss CChhaalllleennggee PPoolliicciieess 222Dominique Crozat

PPaarrlliiaammeennttaarryy EElleeccttiioonnss iinn 2277 EEUU CCoouunnttrriieess:: AA SSccoorree--CCaarrdd 228Gaël DeSantis

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GGuuaaddeelloouuppee JJooiinnss FFoorrcceess AAggaaiinnsstt AAbbuussiivvee PPrrooffiittss 240Hélène Romieux

PPoosstt--SSoovviieett CCrriittiiccaall MMaarrxxiissmm 243Alexander Buzgalin

LLiisstt ooff CCoonnttrriibbuuttoorrss 246

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Contents

EEddiittoorriiaall 4Walter Baier and Elisabeth Gauthier

TThhee LLeefftt aanndd tthhee EEuurrooppeeaann PPaarrlliiaammeenntt 6Francis Wurtz

TThhee RReettuurrnn ttoo PPrriimmiittiivvee AAccccuummuullaattiioonn.. UUssiinngg CCoommpplleexx FFiinnaanncciiaall IInnssttrruummeennttss 16Saskia Sassen

““AA BBiilllliioonn DDoollllaarrss ttoo SSaavvee tthhee GGlloobbaall EEccoonnoommyy”” 24Joachim Bischoff

FFaacceedd wwiitthh aa CCrriissiiss,, WWiillll tthhee EEUU MMaannaaggee ttoo bbee MMoorree TThhaann tthhee SSuumm ooff iittss PPaarrttss?? 36Lutz Brangsch

TThhee MMiissssiioonn ooff tthhee IIcceellaannddiicc LLeefftt:: RReessccuuee tthhee WWeellffaarree SSttaattee 48Steingrímur Sigfússon in conversation with Ruurik Holm

TTrraannssppaarreennccyy,, FFiinnaanncciiaall CCrriissiiss aanndd TTaaxx HHaavveennss 56Matti Ylönen

TThhee UUrrggeenntt CCaallll ffoorr aa SSoocciieettyy ooff SSoolliiddaarriittyy 66Institut für Gesellschaftsanalyse der Rosa-Luxemburg-Stiftung

TThhee ““RReeffoouunnddaattiioonn ooff CCaappiittaalliissmm”” aanndd tthhee NNeeww CChhaalllleennggeess ffoorr tthhee LLeefftt 80Renato Soeiro

AApppprrooaacchhiinngg tthhee CCrriissiiss 84Michalis Spourdalakis

RRaaddiiccaalliissiinngg tthhee AAggeennddaa:: tthhee LLeefftt’’ss RReessppoonnssee ttoo tthhee CCrriissiiss 88Euclid Tsakalotos

AA NNeeww PPhhaassee ooff NNeeoolliibbeerraalliissmm:: CCoollllaappssee aanndd CCoonnsseeqquueenncceess ffoorr SSwweeddeenn 98Daniel Ankarloo in conversation with Patrik Vulkan

CCaappiittaalliissmm aanndd CCrriissiiss iinn DDeennmmaarrkk 110Anders Lundkvist

FFiinnaanncciiaall CCrriissiiss aanndd tthhee RReemmaakkiinngg ooff tthhee SSoocciieettyy ooff LLaabboouurr iinn SSppaaiinn 120Armando Fernández Steinko

CCrriissiiss aanndd tthhee CCzzeecchh RReeppuubblliicc:: PPoolliittiiccaall OObbsseerrvvaattiioonnss ffrroomm tthhee LLeefftt 132Jir í Málek

CCrriissiiss iinn PPoollaanndd 146Krzysztof Pilawski

The current issue of transform! european journal for alternative thinkingand political dialogue introduces some innovations. There are two

changes: first, a change of organisation and of technical coordination behindthe scenes. This was necessary, because with the publication of the first issuesof the Portuguese and Italian editions, the journal is now being published insix languages.*

Distribution and marketing are now being handled by VSA PublishingHouse, Hamburg.

Starting in May, the print edition will be supplemented by a modified andtechnically improved website. At the same time, the first issue of a regularlypublished newsletter will appear. The editorial coordination of this expand-ed medial presence and the production management of the English issue ofthe magazine are from now on in the hands of Rosa Reitsamer, sociologistand journalist based in Vienna.

This expansion of the network’s public presence was agreed on at the lastgeneral meeting in January 2009. By now the network consists of 16 organi-sations, journals and educational institutions from 13 European countries.Due to its recognition as a political foundation linked to the Party of theEuropean Left, transform! europe also receives funding from the EuropeanUnion through which two research projects are being financed.

One of these, called “Strategic Prospects of the European Radical Left”, hasas its focus a comparative survey of the political experiences of the left par-

ties in Europe and the formulation of questions relevant to the developmentof each of them. The second focus of transform! this year is the global eco-nomic crisis and its political consequences and impact on people’s thinking.The current issue of the journal, with its thematic focus, offers an initial sur-vey of this work. A working group headed by Elisabeth Gauthier provided theeditorial coordination of this thematic area.

Within the economic crisis, tensions in Europe are rapidly increasing andaggravating the EU’s legitimation crisis.

The articles published in this issue indicate the multi-faceted forms as-sumed by the crisis, with its differing but also shared tendencies. Unfortu-nately, it is clear that the capacities of the left and progressive forces to carryout a change of politics in the individual countries and on the European scaleare limited at the moment.

In the last weeks, sectoral, but also in part coordinated and unified, resist-ance movements have developed around the slogan “we won’t pay for yourcrisis”, which are to be combined into a series of Europe-wide demonstra-tions planned by ETUC for mid-May. The extent and direction of the deepglobal crisis’s impact on social and political conditions will be more broadlyaddressed in our Fall issue to appear after the June European elections.

Right before going to press we received Ruurik Holm’s interview with theIcelandic Finance Minister.

The illustration of the front page was provided by the Belgian Trade Unionvvlbbdo - Campaign of the Belgian Coalition for Decent Work to which wewant to express our heartfelt thanks. The illustrations inside the journal aretaken from a photo report on the World Social Forum at Belém by ÉmanuelleReungot.

*) Thus the journal appears in English, Greek, German, French, Portuguese and Italianeditions. A Spanish edition is in preparation.

Edito

rialEditorial

Walter Baier and Elisabeth Gauthier

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The Left and the European

Parliament

Francis Wurtz

the Parliament, therefore, has the power it needs to block or annul a Com-mission proposal. It did not, for example, approve a proposal to liberaliseport services and blocked one on working hours that would have allowedeach member state to authorise a workweek of 65 hours or more.

Too often, unfortunately, the situation is otherwise: Nearly every time thatthe European United Left–Nordic Green Left (GUE-NGL) presents anamendment to reject a Commission proposal, which it does nearly systemat-ically, it receives only a hundred or so votes in favour and is rejected by a ma-jority (including the European Socialists) that prefers to modify the textwithout going to the core of the issue. This is what happened with the“Bolkestein Directive”: The majority simply reduced its scope, leaving themistaken impression that it does not apply to sectors that it does not specif-ically cover – health, social services in the general interest … An outright re-jection of such an emblematic text, would have, in the end, made it muchmore politically difficult for the European Commission to renew its assaulton these points. Which it already has begun to do.

It is obvious: The problem is not the Parliament’s lack of power. Rather,there are not enough MEPs willing to break – with their actions and withtheir votes – from the logic of liberalism. To declare that “the European Par-liament is useless” sounds “leftist” but helps the right … and its allies. Mean-while, directives are passed and peacefully transposed into the national legis-lation of each member state.

Two questions deserve clarification in this context. The first concerns an ap-parent contradiction: If the prerogatives of the European Parliament have beenreinforced by the recent Treaties, why have we fought them? The answer is be-cause these same Treaties have, above all, integrated and codified a liberal eco-nomic model – with constraining regulations on every member state thatsigned and ratified them. As a result, a “different Europe” requires a differenttreaty. This is fundamental. But this does not obviate the potential – and theleft’s duty – to use the new power of this Parliament to oppose these regula-tions, to prevent them – as much as possible – from becoming directives andto question the legitimacy of the current (liberal) model in order to prepare theground for an alternative. A little dialectic never hurt the class struggle.

The other question to clarify is the link between this type of parliamentaryaction and social movements. Without the support of social struggles, the as-sociative movement, citizen networks, local elected representatives, a grouplike ours would have been ruthlessly marginalised within the European Par-liament. On the other hand, by becoming the privileged interlocutor of thesocial players charged with the need to “change Europe,” the group has be-come an undeniable presence in the political face-off within all the Europeaninstitutions. It is clear, therefore, that our group needs these close and perma-

It is considered good form in some leftist circles – particularly the “far left”– to look down on the European Parliament: “What are you doing in this

mess?”; “Decisions are taken elsewhere”; “Any change is illusory”… I under-stand, naturally, and share the exasperation generated as much by the struc-tural orientation of European Union policies as by the deep lack of democ-racy in the way that it functions. I too deplore the “parliamentary cretinism”that leads elected representatives to shut themselves up too frequently in the“bubble” of their assembly, far from real life, and to vastly overestimate theirpersonal ability to change things. But, there is, in my opinion, more to it thanthat.

Permanent cooperation with social movements

The conditions in which the European political struggle generally takesplace often are not recognised, along with the prerogatives acquired by theStrasbourg Parliament, in particular, over the last 15 years – notably in thearea of “co-decision.” In a number of areas, particularly those related to theEuropean internal market, the European Commission proposes draft Direc-tives or Regulations, but it is the European Parliament and the Council(which represents the 27 governments) that amends or rejects them. And ifthese two institutions are unable to agree on a text, identical down to the lastcomma, the directive or the regulation cannot take effect. In many instances,

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The Left and the European Parliament

Francis Wurtz

The social orderWe are working to build a Europe where the principal priority would be to

put people first – for their equality, fulfilment of their potential and theirrights. This includes employment and the training that should be guaranteedto men and women alike. It covers education, research and culture. It in-cludes health and living conditions. And, it calls for a contemporary form ofcitizenship, in the workplace as in society. Choices like these need adequateresources. We especially advocate the mobilisation of all pertinent instru-ments to direct funds towards the financing of these priorities. Which bringsus back to our respective proposals concerning the European Central Bank,selective credit, public finance, taxation of capital movements and global ac-tion to significantly reform international institutions. For some of us, thisalso means support for the emergence of a real common global currency fora common financing of the goods and services common to all mankind.

Ecology

We are working for a Europe that takes the initiative in the area of ecology.I am thinking of the climate, biodiversity, clean energy, public transport andcombined road-rail transport, decent housing, clean air, responsible andpublic water management. In addition, I recognise also, in this context, theneed to aspire to a new food and agricultural policy that protects farmers andnot agribusiness.

Women’s rights

We are working for a Europe that recognises the equal rights of men andwomen in all areas of life – starting with the workplace. For many of us,women’s rights are essential to the transformation of society. Europe shouldbe anti-patriarchal and associations should be recognised as partners in thesocial and societal dialogue. In order to reinforce all rights, we demand thatthe most progressive laws in effect in the European Union apply to all womenwho live in Europe – including laws on parity, a cornerstone of democracy.We especially demand recognition of the right to reproductive health andsexual education; effective respect for the right of women to contraceptionand abortion; a framework law to protect women from violence.

Solidarity

We are working for a Europe where people stand together, where exclusionis excluded, precariousness banished and discrimination, racism, xenophobia

nent cooperative ties with unions, NGOs and networks of the left in order tocarry useful weight.

I should add that the opposite also is true. Social mobilisations alone arenot enough to shift the political balance of power. There is no mechanicallink between the power of a demonstration in front of the Parliament and theoutcome of a parliamentary vote. Changing the status quo in Europe requiresconstruction over time, using social struggles, exchange of ideas and politicalinterventions – from the “ground” on up to the institutions.

What was striking about the extraordinary citizens’ irruption into the cam-paign for the 2005 referendum in France was that it encompassed all levels ofintervention. Let me point out that the launching of this movement tookplace in the European Parliament on September 3, 2003, in the form of rea-soned opposition by the GUE-NGL group, which stood alone in the face ofthe “standing ovation” of a subjugated Parliament for Mr. Giscard d’Estaing,the “father of the Constitution”, who came to present the draft constitution-al treaty that had emerged from the “Convention” over which he presided.This revelation of “the hidden face of the Constitution” was communicatedin several million flyers distributed all over the country by a political party –the French Communist Party (PCF), as it happens – convinced of the justiceof the cause and organised enough to reach a large part of the population.The most politicised of our fellow citizens reached out to more and more or-ganisations on the left – united for once. A debate was launched that snow-balled across Europe as progressive people in other European countriesjoined in. This is the best illustration of the “new political path” and the onlyone able, we think, to change Europe in the long run.

The main elements of our left identity

Naturally, the ways in which this citizens’ movement connects with politi-cal and parliamentary activity vary from one country to another and alsofrom one issue to another. The left in the Netherlands and in Ireland had itsown victorious experience with the Treaty. In Italy and Germany, the left suc-ceeded in turning out extraordinary demonstrations for peace. In Austria, re-sistance to Haider impressed all of Europe. In the Nordic countries, ecologyand feminism moved to the forefront.

For a group like ours, the goal since then has been, and will be, to share thisexperience in order to build together a strong left identity that transcendsmember parties, and, in the event, their specific positioning in the politicalspectrum. If I had to highlight some key elements of this “GUE-NGL identi-ty,” I would cite: the social order, ecology, feminism, solidarity, democracyand human rights, peace.

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Faced with the forces of domination that oppress so many nations, Europeshould not conform to the “Western” mould but should grow closer to all thecountries that are seeking new ways to permit the emancipation and respectfor the dignity of their people.

In a word, we want to be a European lever to change the world!

But for this resetting of priorities to become more than a catalogue of pi-ous wishes and for it to actually, if very gradually, become reality, we must at-tack the sources of the model that failed at the same time that it impedes nec-essary change: the “market economy open to free competition;” “free circu-lation of capital”; a Central Bank inaccessible to citizens as well as to publicinstitutions and dedicated to financial markets; a so-called Stability Pact in-tended in fact to ration public social spending; generalised free-exchange ofgoods and services and its corollary: permanent pressure to lower wage costs,environmental standards, regulation and rights, in the name of competitive-ness; major decision centres beyond the reach of ordinary citizens and theirelected representatives. In other words, everything that has built a liberal Eu-rope in all the treaties over the last 20 years, the Treaty of Lisbon included.Our group is the only one to reflect this coherence between the objectives andthe means of a “different Europe”.

A point of reference for progressives in Europe and around the world

In the course of our battles, our paths naturally have crossed those of theentire European progressive spectrum. First, unions: Our principle has beento cooperate openly with all those who considered cooperation in their owninterest, from the European Trades Union Confederation (ETUC) to the “Eu-ropean Social Forum” led by our friend Horst Schmidthenner, who is verycommitted to the struggle against a liberal Europe. On public services, for ex-ample, we were able to bring 22 European Union railway workers’ unions to-gether with four parliamentary rapporteurs on a package of four directivesintended to liberalise rail service. In another area, we initiated a hearing on aCommission Green Paper on the “modernisation of labour law”: more than30 union representatives from 12 European countries, from the East as wellas the West, took part. On the subject of the Bolkestein Directive, the diver-sity of our interlocutors was even greater because all the organisations pres-ent at the giant Brussels rally met with us the night before to exchange par-ticularly valuable experience. In fact, hardly a month goes by without a work-ing meeting with unions and leaders of social movements.

We also are in permanent liaison with our friends of the Party of the Euro-

and homophobia proscribed; where people are not pitted against each otherand where partnership with the South is based on equality and not on sub-mission, mutual development and not predation, respect and not condescen-sion or disdain. This sort of Europe should proscribe the poverty that affects65 million Europeans, two-thirds of them young! Residents should enjoy thesame rights as other citizens – including the right to vote in local elections.And this sort of Europe should protect refugees instead of protecting againstthem. In such a Europe, there is no place for a text like the “Directive ofShame” on detention centres, nor for the pursuit of people without identitypapers!

Democracy

We are working for a structure that would actively and durably involve citi-zens in all important undertakings: development of policy, control of its im-plementation, evaluation of results. We are mobilising also for effective re-spect of fundamental rights in the European Union: It is significant that theauthor of the only report that the current legislature has adopted on thisquestion is Giusto Catania. a member of our group. The report covers allforms of discrimination – from the cases of immigrants and refugees to therights of children as well as social rights.

Peace

We are working for a Europe that will use its weight and its influence to cre-ate new rules in international relations: more equitable, more democratic,more peaceful.

Faced with the intransigence of unresolved conflicts – like the occupationof Palestine and the criminal suffocation of the people of Gaza –, faced withthe growing banality of war – as in Iraq or Afghanistan – Europe should takea stand; without obligation to the governments responsible, Europe shouldput its authority at the service of political solutions based on internationallaw; commit itself to renewed efforts toward disarmament and not accept theinstallation of an “anti-missile shield” on its soil; it must liberate itself fromthe guardianship of NATO, which no longer has reason to exist.

Faced with the scandal of hunger, with flagrantly unequal developmentand with all the maladjustments of a runaway system, Europe should make acommitment to rise above economic warfare and the survival of the fittest inorder to build cooperative relationships based on mutual and complementa-ry interest. One billion human beings suffer from malnutrition in the 21st

century. This is a monstrosity that Europe should not accommodate!

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GUE-NGL, in cooperation with the Brazilian PT, created the World Parlia-mentary Forum within the World Social Forum in the first year of its exis-tence in Porto Alegre in 2001 – an exciting experience!

I hope that all those who work, in one way or another, with our group willrecognise themselves in this too rapid overview. Their trust and their friend-ship are the encouragement we most value. A bientôt, for another chapter inour common commitment.

Francis Wurtz is president of the Confederal Group European United Left/Nordic Green Left.

pean Left, to which many of the parties that make up our group belong; withrepresentatives of progressive foundations – like the Transform ! network –as well as, more recently, with REALP, a new and promising network of Eu-ropean elected representatives.

The same can be said for the associative movement, in all the areas citedabove. This is true of movements for women’s rights – like the “EuropeanFeminist Initiative” or “Choisir”, and national associations as well. It is alsothe case for ecological organisations: Seven or eight years ago we undertookto cooperate over the long-term with Ricardo Petrella, internationally knownfor his fight for recognition of the right to water. This cooperation notablyled to co-organisation of the first “World Assembly of Elected Representa-tives and Citizens for Water” in 2007 in the hemicycle of the European Par-liament. Many other environmental challenges – like asbestos and globalwarming – have led to initiatives that have associated our group with veryrepresentative organisations. We also are proud of having invited Dr. Pachau-ry, President of the GIEC (IPCC) – the most recent winner of the Nobel Prizefor Peace – to address the current session of Parliament in order to give himthe opportunity to make MEPs more aware of the consequences of climatechange.

Associations that support the cause of immigrants and refugees also haverecognised our group as a primary channel of communication on behalf oftheir struggle, particularly in the fight against detention centres and the “Di-rective of Shame”: visits to Lampedusa, to Melilla, to the Canary Islands; ahearing at the European Parliament; a travelling exhibition; an online peti-tion; an educational brochure. Our group has played a role that the relevantassociative movement has found useful.

I already have alluded to human rights: A report by our colleague Catanialed to wide agreement with associations committed to human rights. Specif-ic initiatives on the rights of homosexuals in Europe brought together asso-ciations like LGTB-ILGA-SOS HOMOPHOBIA.

Finally, the group’s commitment to international solidarity has made it, ifI may say so, the point of reference in the European Parliament for the forcesof progress in a good many regions of the world: from Palestine to TurkishKurdistan; from Africa to the new democracies of Latin America; from Iraqto Afghanistan; from the Czech Republic (where the “anti-missile shield” issupposed to be planted) to the NATO summit in Strasbourg and in Kehl, wehave worked to be present on the side of those committed to peace in theworld.

In the same spirit, our group took an active part in all large altermondial-ist gatherings since the beginning of this movement – the inter-ministerialconference of the WTO in Seattle in 1999 – up to the present day. Thus, the

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The Return to Primitive

Accumulation

Saskia Sassen

Thus, in the US, which is ground zero for these forms of primitive accumu-lation, everyday an average of 10,000 homeowners have been losing theirhome to foreclosures. An estimated 10 to 12 million households in the USwill not be able to pay their mortgages over the next 4 years and, under cur-rent conditions, would lose their home. This is a brutal form of primitive ac-cumulation: presented with the possibility (which is mostly a fantasy, a lie) ofowning a house, modest-income people will put however little savings or fu-ture earnings they have into a down payment.

This type of complexity aimed at extracting extra value form whateverstratum –the small and modest and the big and rich – also explains why ourfinancial system is in permanent crisis. Thus what we are calling a crisis is ac-tually part of how this financialised capitalism works – it is business as usu-al. The financialising of more and more economic sectors, that we saw sincethe 1980s, has become both a sign of the power of this financial logic and thesign of its self-exhaustion. When everything has become financialised, fi-nance can no longer extract value. It needs non-financialised sectors to buildon. The last frontier is taxpayers’ money – which is real, old fashioned, not fi-nancialised money.

What makes the current crisis different is precisely that financialised capi-talism has reached the limits of its own logic. It has been extremely success-ful at extracting value from all economic sectors through their financialisa-tion. It has penetrated such a large part of each national economy in, espe-cially, the highly developed world, that the parts of the economy where it cango to extract non-financial capital for its own rescue have become too smallto provide the amount of capital needed to save the financial system. Theglobal value of financial assets (which means: debt) in the whole world bySeptember 2008, as the crisis was exploding, was three and half times larger(160 trillion dollars) than the value of global GDP. The financial system can-not be rescued by pumping in the money we have.

This, in turn, also makes legible the extreme abuses of whole economiesmade possible through extreme forms of financialisation. For instance, be-fore the current “crisis” the value of financial assets in the US had reached450 % of GDP (McKinley Report 2008), that is to say 4.5 times the GDP. Inthe European Union it stood at 356 % of GDP. The total value of financial as-sets in Germany, for instance, was 9 trillion dollars in October 2008. Moregenerally, the number of countries where financial assets exceed the value oftheir gross national product more than doubled from 33 in 1990 to 72 in2006.

Leaving aside the question of whether we want to live in a capitalist econ-omy, let me say that even capitalist economies do not need financial assetsthat are 4 times the value of GDP. Thus even within a capitalist logic, giving

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One of the marking features of the period that begins in the 1980s is theuse of extremely complex instruments to engage in new forms of prim-

itive accumulation.Global firms that outsource hundreds of thousands of jobs to low-wage

countries have had to develop complex organisational formats, using enor-mously expensive and talented experts. And for what? To extract more labourat the cheapest possible price, including unskilled labour that would be fair-ly low in the developed countries as well. The insidious element is that mil-lions of saved cents actually translates into shareholders gains.

Finance has created some of the most complicated financial instruments inorder to extract the meagre savings of modest households by offering creditfor goods they may not need, and, even more serious, promising the possibil-ity of owning a house. The aim is to secure as many credit-card holders andas many mortgage holders as possible, so that they can be bundled into in-vestment instruments. Whether people pay the mortgage or the credit cardmatters less than securing a certain number of loans that can be bundled upinto “investment products”. Once thus bundled, the investor is no longer de-pendent on the individual’s capacity to repay the loan or the mortgage. Us-ing incredibly complex sequences of “products”, investors have made trillionsand trillions of profits on the backs of modest-income people. This is the fi-nancialisation logic that has become so dominant since we entered the ne-oliberal era in the 1980s.

The Return to PrimitiveAccumulation. Using Complex Financial Instruments

Saskia Sassen

er, when we consider how many “jobs” would be created if there were a sys-tem that aimed at housing and feeding those 2 billion, the world would needthose 50 million currently unemployed to go to work and then another bil-lion workers.

Could our financial crisis serve as one of the bridges into a new type of social order?

It could help us refocus on the work that needs to be done to house all peo-ple, clean our water, green our buildings and cities, develop sustainable agri-culture, including urban agricutlure, provide health care to all, and so on. Itwould employ all those interested in working. When we consider all the workthat needs to be done, then the notion of mass unemployment makes littlesense.

History suggests that a market economy driven by profit maximisationdoes not get us there. But history also shows us that some mixes of well work-ing markets and a strong welfare state have produced the best outcomes yet,as is the case in the Scandinavian countries. Although these societies, too, arebecoming more unequal, there is a strong ground beneath which the govern-ments will not let people fall.

Thinking in terms of the work that needs to be done means entering aneconomic space that is radically different from that of high finance. For in-stance, the current debate in Western Europe and in the US about rescuingthe financial system seems to consider only a financial solution. Financial so-lutions in our current world involve trillions, many trillions, of dollars or eu-ros or pounds. But growing our economies requires (only) billions.

Even in a vast country like the US, looking at the crisis through the eye ofthe economy is in terms of billions, not the trillions of high finance. And theUS starts from a rather low level, an economy where one third of workplacesare substandard, putting the US at 47th among countries for workplace in-jury, including fatal injuries. Its infrastructure is ranked between mediocreand bad. For instance, by 2007, 26 % of the nation’s 599,893 bridges were rat-ed structurally deficient or functionally obsolete: it would take $20 billion tofix them. In contrast, we have extended $8 trillion to our banks and it hasmade no difference to the financial crisis. Even with the mediocre infrastruc-ture in the US, the basic needs to upgrade it are in the billions of dollars, notin the trillions.2

In the last few decades we have had the technology to eliminate diseasesthat affect millions and the capacity to produce enough food to feed all. Butthe opposite has in fact happened: millions and millions die from preventa-ble diseases and even more go hungry. Poverty has become more radical:

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more funds to the financial sector in order to solve the financial “crisis” is notgoing to work. It would just continue the vortex of financialising economies.Financialisation in Europe has grown faster than in the US over the lastdecade, mostly because it started from a lower level: it grew at a compoundannual growth rate of 4.4 % from 1996 through 2006, compared with the USrate of 2.8 %.

Yet another way to portray where we find ourselves is the different ordersof magnitude involved in banking and finance, respectively. For instance, inSeptember 2008, when the current phase of the crisis exploded into the open,the value of bank assets amounted to several trillion dollars; but the total val-ue of credit-default swaps, which was the straw that broke the camel’s back,stood at almost 60 trillion dollars, more than global GDP; these were debtsthat were due, and the money was not there. More generally, and to give asense of the orders of magnitude that the financial system has created overthe last two decades, the total value of derivatives (a form of debt), the mostcommon financial instrument, stood at over $ 600 trillion. Financial assetshave grown far more rapidly than any other economic sector.1

These numbers illustrate that we are now at an extreme situation, but it isnot anomalous nor is it created by exogenous factors, as the notion of “cri-sis” suggests. It is the normal way this particular type of financial systemfunctions. And every time we have bailed out the financial system since thefirst crisis of this phase, the New York stock market crash of 1987, our gov-ernments have given finance the instruments to continue its leveraging stam-pede. We have had five bailouts since the 1980s, the decade when the new fi-nancial phase took off. Every time, taxpayers money was used to pump liq-uidity into the financial system. And every time, finance used it to leverage.The end of the cornucopia is near – we have run out of money to match theenormous needs of the financial system.

One of the major challenges we face in moving out of our current capital-ism is to definancialise our economies. The level of debt in the US today ishigher than in the 1930s depression. For the US, debt was about 150 % ofGDP in 1929, and 260 % by 1932. In September 2008 the outstanding debtdue on credit-default swaps, a made-in-America product, (and only one typeof debt), was over 400 % of GDP. Globally, the value of debt in September2008 was 160 trillion (which is 3 times global GDP), and the value of out-standing derivatives is an almost inconceivable $640 trillion, which is 14times the GDP of all countries in the world.

Definancialisation will require focusing on some very basic facts. The cur-rent estimate is that global unemployment stands at 50 million. This is trag-ic for those affected. But it also shows how limited this number is when wethink of the 2 billion people in the world who are desperately poor. Howev-

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being poor used to be about having a plot of land that did not produce more.Today it means only having your body. We see a type of radical poverty in theglobal south but also in the rich countries. And we have seen heightened in-equality, with a new global class of super-rich and the impoverishment of theold middle classes. Profit maximisation is the dominant logic in sectors likethe pharmaceuticals and corporate food producers. The increase in the fi-nancialisation of market economies over the last twenty years has furthersharpened the negative effects of profit-maximisation logic.

Notes

1) More detail can be found in my “A Bad Idea: A Financial Solution to the Financial Cri-sis”, www.huffingtonpost.com/saskia-sassen/a-bad-idea-using-a-financ_b_145283.html2) See on this a partial list in my www.huffingtonpost.com/saskia-sassen/the-billions-of-our-econo_b_170009.htmlAnd for a way of thinking about this work as, in part, the building of an economic plat-form that we can begin to think of as “our economy” seewww.thenation.com/doc/2009\hich\af0\dbch\af241\loch\f0 0406/sassen

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„A Billion Dollars to Save the

Global Economy“

Joachim Bischoff

not be the case at the London Summit. The final declarations consist for themost part of promises which will soon be forgotten, unapologetically broken,or which are, in the best of cases, simply devoid of content. For the partici-pating politicians the most important thing was to convey to the voters andto the financial markets the message that they are trying to find a way out ofthe crisis together.

What is our situation today?

The economic crisis which erupted in the year 2007 has expanded from thenarrow terrain of the mortgage sector – this is, from loans on real estate – toa worldwide crisis of the financial and credit sectors. In the meantime it canno longer be denied that we are also confronted with a steep decline of thereal economy, this is, the industry and services as well as global flows of tradeand economic exchange are also massively on the decline.

The thesis of an acute global recession, which is merely deeper but still justthe end of an economic cycle, is based on an erroneous notion of social devel-opment. We are dealing here with a serious crisis. Debating whether this is anormal systemic crisis or a breakdown of the capitalist economy is hardly il-luminating in my opinion. Therefore I prefer the term “crisis of the century”,which is comparable in several respects to the global economic crisis of the1930s1.

However, and unlike at the end of the 1920s, the reaction to this break inthe structure of monetary and capital accumulation was not usually one ofcutting incomes and restrictive finance and fiscal policies of public budgets.Whether capitalist societies will slide into a deflationary, depressive develop-ment does not least depend on the extent and kind of state intervention.

Dealing with the crisis of the century will at least encompass one or twoperiods of an economic cycle (4 to 6 years). The anti-crisis programmeswhich were employed at the end of 2008 are decisive for the duration andthe course the economic crisis. Although they are much more adequate thanthose employed in the 1930s, they also fall far short of what is needed. Ad-ministering the right dosage of anti-crisis-measures is blocked by the fear ofthe negative consequences of an offensive use of public credits. Keynes re-marked – and he was right – that, “The long-term perspective is misleadingin everyday business matters. In the long run we are all dead. Economists(and politicians) are taking the easy way when they say in turbulent timesthat the sea will calm down again when the storm is over.” So far there areno signs of the storm of the crisis subsiding and so there are still possibili-ties of influencing its course.

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The group of economically most powerful states (the G20) have agreed ona package of measures to combat the global financial and economic cri-

sis. The host of the summit, British Prime Minister Gordon Brown, interpret-ed the larger meaning of this agreement: “A new world order is emerging, andso we are entering a new era of international cooperation”. However, this iscertainly an exaggeration.

At the conference, principles were outlined for the reform of the financialsystem through increased regulation of the banks, of hedge funds and man-ager compensations. It is unclear what the concrete steps will be. Also unan-swered is the question of how the toxic credits and bonds will be eliminated.The IMF – based on the opinion of many economists – had designated thisas an important condition for a successful battle against the financial crisis.

What concrete results can be shown? To begin with, the ca. $ 500 billionsupplementary budget for the IMF, as well as additional special drawingrights on $ 250 billion. Further, a package for trade financing was passed, andthe facilities of the development banks were increased. All of these measurestogether amount to $ 1,100 billion. The expansion of lines of credit is doubt-less a contribution to the stabilisation of the global economy, but its practi-cal application will still require some time.

For many years we have seen a gap between the boastful pronouncementsat such summits and their practical realisation. There is some small progress,but an epoch-making change has so far not appeared, and this certainly will

“A Billion Dollars to Save the Global Economy”

Crisis Summit in London

Joachim Bischoff

cial institutions is not in itself a solution, only the decisive step towards theorganised distribution of the loss of values. Among these the price correc-tions of the values of bonds of all kinds must be counted as well as the pend-ing amortisations of loans, which cannot be paid any more. The idea that itis possible to bring about a restoration with the help of capital subsidies andguarantees from the state represents a serious misjudgment and only pro-longs the crisis-ridden process of adaptation.

2. In the end, we are dealing with an economic cycle, which is breakingdown simultaneously and on a global scale as rapidly as in the 1930s or evenmore so. In a system of production where economic growth was broughtabout by the expansion of loans, liquidity becomes the core question in theface of the bursting of the mortgage bubble and the large-scale devaluationof bonds. If the coherence of the reproductive process is based on the loan,and the loan suddenly disappears and only payment in cash counts, this mustnecessarily trigger a crisis with a massive rush on the means of payment. Atits core, the financial crisis results from the fact that the major portion of as-sets, of bonds of all kinds (that is, claims on future social wealth), lose theirvalue all at once. The crisis sets in when you can no longer pay with your “as-sets”, but have to pay with your money. In moments of crisis the function ofmoney as means of payment becomes immediately obvious: the chain ofpayments is interrupted, because the maintenance of liquidity becomes themost important principle.

3. Several groups of debtors have to be relieved of their debts. Among oth-ers this includes the private US-American, British, Australian, Irish, Spanish,Greek, etc. households. As long as there is no middle-term levelling of wage/ income differences and a bridging of the social gap, a reform of the finan-cial system will just end in talk. One of the major causes of the formation ofbubbles on the financial markets is the concentration of social wealth. There-fore one precondition of successful stabilisation is a substantial correction ofthis unequal distribution of incomes and properties. In addition to that, theprivatisation of central forms of social security must be stopped and reversed(old age pensions, health, education).

4. Steps towards a new financial and economic system are indispensable.The crisis has shown that market and capital management without politicalregulation and democratic control have once more caused a social catastro-phe. That is why democratic control and international cooperation are nec-essary. Financial supervision on national levels and international coopera-tion among the institutions of regulation and supervisory authorities – with-in the EU in particular – have to be strengthened and democratised. Allaround the globe it is necessary to draw clear boundaries for unregulated freetrade and unrestricted capital mobility. In a new international treaty which

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The double strategy of the political left

Basically, the political left has to follow a double strategy: first it is neces-sary to regain political hegemony and to relegate neoliberalism, which in thecourse of the crisis was stripped of its economic and social basis for actingpolitically, to the fringe. Second, on this basis the formation of solidarityeconomy with its new relationship between market and social/public regula-tion can be promoted.

In his statement on the economic stimulus programmes in Germany, econ-omist Heiner Flassbeck arrives at the conclusion that “Germany is undergo-ing its most difficult economic phase since World War II. A bottoming-outand self-stabilisation of the economic cycle are not in sight. In contrast toearlier crises there are no important economic spaces and sectors in theworld which are growing and could counter-balance the slump. Germany isnot less but more susceptible to a global recession because of its exorbitantexport ratio and weak domestic demand with real wages falling for years.(…) Besides the spatial dimension on the global scale the moment of time isdecisive: the longer the downward trend lasts, the more it gains in momen-tum and strength. The decline turns into stagnation, the stagnation into re-cession and the recession into a long-term depression. At the same time, in-flation which has until recently been considered the major problem, can,through a significant and fast reversal of the rise of prices, turn into defla-tionary trends, which can in no time turn into a full-blown deflation. Thecrises of the financial markets and of the economic cycle are reinforcing eachother negatively. (…) Many are still ignoring the problem at the core of thecrisis. What we are experiencing is not a normal cyclic regression as happensevery few years, but a rapid slump of global investment activity resultingfrom the fact that everywhere in the world through and after the financialcrisis the price relations decisive for investors have drastically shifted atbreathtaking speed.” (Flassbeck 2009) This assessment is can also be appliedto all the other major capitalist countries.

Resulting tasks

From this outline of the “Crisis of the Century” the following tasks result:1. We are confronted with an insolvent finance and an ailing bank system

which has to be re-capitalised. So far the idea is dominant that with the helpof public money or guarantees the worthless property titles can be rechargedwith their old market values. Already Marx derided this illusory conceptionof overcoming a financial crisis. In times of crisis, the earlier mightily bloat-ed financial volume is reduced. That is why the nationalisation of the finan-

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Parallel dimension of action

For the near future, in which decisions are made concerning the depth, du-ration and further perspectives of the crisis, four parallel dimensions of ac-tion are involved:

1. Public funds and intervention for backing the crippled financial sector:In the recent years of the credit boom the investment quota outside the tra-

ditional banking system grew dramatically. “The extent of – in the long run– risky and relatively illiquid investments, which had been financed by veryshort-term obligations, made many vehicles and institutions prone to a clas-sic run on the banks, yet without protective measures such as deposit guar-antees which are at the disposal of the banking system to reduce such risks.… It remains a fact, however, that the expansion of the old-fashioned bankloan was by far not sufficient to compensate for the shrinkage of the creditvolume as a consequence of a breakdown of the shadow banks.” (Krugmann2009: 189)

Practically, we will not be able – after some zig-zags – to avoid a completenationalisation of the bulk of the financial system, because neither stabilitynor an organised distribution of the losses can be achieved in any other way.

2. Public funds and state intervention to cushion the decline of the realeconomy.

So far, the capitalist metropolises have not faced what is needed. The pro-grammes are either too small-dimensioned or too contradictory. The excep-tion is People’s Republic of China’s anti-crisis package.

3. Since the financial and economic crisis has seized the countries at the pe-riphery, a global rescue plan must be found for alleviating the situation –which confronts Eastern Europe and the Asian developing countries withmajor problems.

4. Also the development of a new financial architecture is important, evenif there is no end in sight to the process of the crisis yet.

The fact remains that the ruling neoliberal economic and political eliteshave, under the impact of the processes of the crisis, abandoned their orien-tation which does not mean that they are ready for an effective anti-crisispolicy. And it is true that neoliberalism is not completely smashed yet, nei-ther as an ideology nor as a hegemonic project. However, its social power toset agendas and to enforce interpretations has been seriously damaged. The

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overcomes the weaknesses of the post-war Bretton Woods System, financialstability, tax justice, social justice and sustainability must have priority overthe free traffic of capital, commodities and services. Social rights and histor-ical achievements of the working people must be guaranteed.

In the face of the deepest economic crisis since the 1930s, which has beencaused by a breakdown of the financial system, prevention of risk to the sys-tem and proposals for a new regulation of the financial sector have moved tothe centre of current political agendas. The hypothesis is certainly true thatwithout a stabilisation of the financial sector a lasting economic recovery willnot materialise.

However it is also true that without putting a halt to the economy’s tailspinand achieving a stabilisation of the entire social reproductive process therewill be no new regulation either of the national or the international financialand monetary system. Hence the measures applied since spring 2007 must becriticised in as far as they allocate all the resources to the financial system. Yet,by public subsidies and guarantees the inevitable re-proportioning of the fi-nancial sector cannot be stopped. In addition, the recovery operations focustoo much on particular ailing financial institutions while an overall concept ismissing. And finally, most of the support programmes of the real economy areinsufficiently dimensioned. In particular, the focus on the social infrastructure(fixed social capital) leads to a neglect of labour-market policy and a suppres-sion of programmes against social polarisation and for overcoming poverty.

In the meantime, the president of the US Federal Reserve, Bernanke, em-phasises that a strategy is required which comprises the entire financial sys-tem and not only its parts. Prior to a meeting of the G-20 ministers of financeand a G-20-summit in April, with deliberations on a global framework forthe supervision of the financial system on its agenda, Bernanke outlines theAmerican ideas: First, it is necessary to do away with the dependence on fi-nancial institutions of “systemic importance”, i.e., it must be possible in thefuture to phase out all financial institutions in an orderly way. Second, the fi-nancial infrastructure must be fundamentally overhauled. This concerns sys-tem, rules and contracts, which organise the mechanisms of trade, paymentand transaction in the financial markets. Third, it is important to shape su-pervision policy and accounting in such a way that they do not have pro-cyclic effects. Fourth, the creation of an independent authority must be con-sidered, which is to detect and name systemic risks. A new internationally-oriented policy could contribute to preventing the worst consequences andso lead to a better functioning of national and global economies. After con-sidering the processes of the crisis and their causes we will come back to theseefforts of reforming the financial sector.

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Change of paradigm

In my opinion, the hypothesis of a far-reaching change of paradigm amongthe ruling elites is correct. Up to now, the majority of these elites interpretsstate intervention as a mere emergency measure, which – being temporary –will in the near future again give way to the resumption of the old privatisa-tion and deregulation policies. However, some critical minds cannot help butraise the question of what the repercussions of all this are on everyday con-sciousness and on political stability.

There is no doubt: The banking system is undergoing a systematic crisis inmost capitalist metropolises. State investments and securities alone do notsuffice to save the huge mountain of debt from a comprehensive process ofinflation. For fear of the dangerous repercussions on the entire social repro-duction process the majority of the political class is pawning the public fi-nances – which means also future tax revenues – to save the credit and prop-erty titles which are losing their value.

The only alternative

After an overall nationalisation of the entire sector a process of obliteratingthe debts and property titles could be organised in a way which takes into ac-count the social and macro-economic necessities and cancels the debt titlesaccording to principles of social justice. It should always be kept in mind thatpart of the huge credit boom consists of claims on old-age pensions and oth-er savings such as the reserves of broad layers of the population.

Due to the pressure of the crisis even the mainstream of the financial worldis demanding reforms. But as always in similar situations such reforms arediscussed controversially. Everything will depend on whose interests deter-mine the reforms. When bankers call for state intervention they mean the so-cialisation of losses, while the profits are to remain in private hands. Whenbankers talk about reforms they mean a (re)regulation in bits and pieces andshort-term crisis management – which is the attempt to preserve the neolib-eral rules of the game and to return to “business as usual” as soon as possi-ble.

In the interest of the majority of the citizens a real change of paradigm isrequired: the financial markets must contribute to social justice, economicstability and lasting development. We cannot simply return next year to thestatus quo ex-ante.

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reason for this evident weakness is not the strength of the political enemy onthe left side of the political spectrum but the crisis-ridden development ofsocial reproduction.

The background of the contradictoriness of the still prevalent neoliberalinterpretation is formed by dramatic empirical evidence of a massive processof shrinkage of the global economy and also by reports of mass protests in-creasing in numbers. The most recent prominent example is Ireland. Notmuch is left of the once highly-praised prosperity of the Celtic Tiger.

Still, we cannot speak of a radical international protest and resistancemovement. More typical are the conditions in Germany: The majority of thepeople regard the international economic and financial crisis as a threatwhich has not yet reached its full extent. Therefore the indications have, formonths now, pointing to a sombre future. The majority of the population isvery alarmed by the development of the crisis. Since September 2008, whenthe crisis reached its climax with the collapse of Lehman Brothers InvestmentBank, the scenario of the crisis has sunk deep into the majority of the peo-ple’s everyday consciousness (Köcher 2009: 5).

This majority has the impression that they have no way to judge what ishappening. “78 % are convinced that the financial system has become soopaque that it completely eludes the understanding of citizens. At the sametime, the majority is aware that the consequences of the crisis, for which mostof them hold the United States responsible, are enormous for Germany. Only2 % of the population believe that the crisis does not really concern Ger-many; only 3 % are not worried. The group which is still reacting coolly andbelieves the consequences are limited, amounts to about one fifth of the pop-ulation and which is disproportionately made up of the young generation.

The vast majority of people experience the events as frightening and won-der what is still in store for them. Although only a small minority have puttheir money in speculative investments, 52 % of the population are worriedabout whether their deposits are safe. The older generation, in particular, isalarmed: 60 % of people over 60 have recently been worried about the safetyof their property and so have 58 % of people between 45 and 59 years of age.Only the generation under 30, most of whom have so far been able to savelittle, considers the financial crisis something that does not immediatelytouch their material situation.” (Köcher 2009: 5)

Against this background, the hypothesis, held by the Rosa LuxemburgFoundation, of an open historical situation is probably over-optimistic (seein this issue: Contribution by Institut für Gesellschaftsanalyse der Rosa-Lux-emburg-Stiftung; and Institut für Gesellschaftsanalyse der Rosa Luxemburg-Stiftung 2009: 8).

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References

Flassbeck, Heiner (2009): Globaler konjunktureller Aufschwung – nur nochvergleichbar mit der großen Depression, New York, 6. 2. 2009. Statementto be heard in the Commission for Economy and Technology of the Ger-man Bundestag on February 9, 2009; documented in: Deutscher Bun-destag, Haushaltsausschuss, 16. Wahlperiode; Ausschussdrucksache 5801

Institut für Gesellschaftsanalyse der Rosa Luxemburg-Stiftung (2009): DieKrise des Finanzmarkt-Kapitalismus – Herausforderung für die Linke.March 2009

Köcher, R. (2009): Wasser auf die Mühlen der Linken. In: Frankfurter Allge-meine Zeitung, October 22, 2009

Krugmann, Paul (2009): Die neue Weltwirtschaftskrise. Frankfurt/Main

Notes

1) It is evident that the current global economic crisis is accompanied by a global ecologi-cal crisis. At the same time, the political arena is blocked in many countries, so that thecrisis of politics and of the political arena must become part of the judgment. In this textthese aspects are not considered.

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Faced with a Crisis, Will the EU Manage

to be More Than the Sum

of its Parts?

Lutz Brangsch

What is important is not whether unity is invoked and proclaimed at thepolitical level, but whether this unity can be founded on any kind of commoninterest. The crisis is not affecting an “EU economy” but national economiesprimarily linked by political decisions and corporations operating multina-tionally, yet organised according to national rules. In other words, an eco-nomic space constituted by a common currency, a number of joint legal reg-ulations and intensive internal trade is being hit by a crisis whose subjectshave the character of nation-states.

In addition to these factors global problems have been regaining real polit-ical and economic weight for some years now. The greatest of these is climatechange, which has become a genuine medium-term threat to the survival ofthe human race. Thus national interests clash with global/regional interestsand long-term interests (e.g. regarding climate change) with short-term in-terests, etc.

The interests of the actors involved can be divided into various categories:First there is the category of the “old” constellations, i.e. the situation of

competition within Europe and as it later developed in the context of worldeconomic relations, especially with regard to the USA and Japan. The proce-dures and structures arising in this connection were aimed at the solution ofconcrete economic problems – examples are the European Coal and SteelCommunity, Euroatom or the EC agricultural market.

The second category concerns the new constellations, mainly those direct-ly linked to the goals of the Lisbon strategy. As a compromise it is seen by thevarious parties as an essential connecting link between the various interestsin the EU. From the point of view of the EU institutions a departure meansa delegitimising of integration, while from the point of view of the individ-ual governments it means a shift in the power constellations.

The third category is linked to the eastward enlargement and its geopoliti-cal and ideological reasons. The swift admission of the East European mem-ber states was not just a reflexive reaction to the geopolitical and economiccompetition of the USA, but also an ideological challenge. EU entry was pri-marily a political question, while the question of the region’s economic fu-ture went by the board. The ideology of the free market triumphed over eco-nomic sense. The aim of securing the economic sustainability of the new sys-tem was subordinated to that of political stability. The price for this is nowbeing paid in times of economic crisis, as there are no options to choose from– there is only the one “correct” way.

The fourth category concerns the mutual dependence of some of the EUmember states as a result of the introduction of the euro and the contradic-tions this created vis-à-vis the other members.

The fifth category concerns resistance and its alternatives, which mainly ex-

In the course of its development the EU has been confronted by variouscomplex contradictions which gave rise to specific solutions. Each of these

stages involved institutions and agreements which left their mark on later de-velopments in the form of compromises. Sometimes one has the impressionthat the Lisbon strategy or the introduction of the euro swept the slate clean.This view is not far wrong, but lacks precision. Institutions and regulationshave their own history.

A complex of intersecting interests

Regardless of its individual political structures, the EU today constitutes aneconomic space held together by so many ties that it seems hardly possiblefor any of its elements to break away. This goes for the financial sector thattriggered the crisis, the corporations with EU-wide interests involving divi-sion of labour, political decisions (such as the Maastricht criteria or the Lis-bon strategy), and the inter-governmental financial links through the EUbudget and its various programmes. But these real integration processesstand in contradiction to the competition between states at the national lev-el within whose framework they take place. At the political level, too, the EUseems on many issues to be more an association of states than an integratedpolitical space. This impression is reinforced by the asymmetrical nature ofthe links, especially those with the East European member countries.

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Faced with a Crisis, Will the EU Manage to be More Than the Sum of its Parts?

Lutz Brangsch

Torn between ideology and reality?

In order to be able to react to a crisis appropriately the first thing one hasto do is be clear about its causes. The reaction has to address these causes.

Both the EU and the individual states see the causes of the economic crisisin the financial system. This view marked the first phase of EU interventions,above all during the preparations for the G20 meeting in November 2008.The regulation of financial markets was considered crucial. This view was notfar off the mark, but was too narrow. In fact, the financial markets are an ex-pression of the high degree of nationalisation that the capitalist economy hasachieved. The financial market permitted a mobilisation of all social re-sources in the interests of reproducing the capital ratio. No sector remainedunaffected by this. The apparently boundless growth that took place on thisbasis was seen as the ultimate legitimisation of the course laid down in Lis-bon and Maastricht. The strict adherence to the course of privatising publicservices was justified by this promise of growth. The financial crisis has nowrevealed that private capital is utterly incapable of guaranteeing sustainabili-ty and effectiveness on its own. Against this background the answer offeredby the designers of the Lisbon strategy is understandable: the crisis wascaused by irresponsible conduct of individuals and the false regulation of themarket. The free movement of capital and freedom of the market are, how-ever, cornerstones of the Lisbon strategy. The removal of the obstacles to thefree movement of capital was also a key element of the deregulation policypursued by the individual member states in recent decades. Freedom of themarket and the free movement of capital were supposed to trigger unbridledeconomic dynamism. Instead they have led to a worldwide economic crisis.Both the EU and its member states are now being driven by this contradic-tion. The first thing they decided was to try and rescue the financial marketsby subjecting them to cautious regulation and giving them enormous injec-tions of cash while preserving their basic structures. In the run-up to the G20summit the EU formulated five requirements for the regulation of the finan-cial markets. What was wanted was “transparency without over-regulation”.This was followed by guidelines for dealing with “bad loans” and other de-tailed regulations. But success remained elusive. The reactions to the deLarosière Report were vague on key issues. If the provisions of Basel II on eq-uity cover are now to be reformed, this may bring a possibility of market sta-bilisation in bookkeeping terms, but it will not really get us out of the exist-ing situation. The financial lobby has also succeeded in evading the plannedtightening of the rules on equity-backed securitisations. Thus resources con-tinue to flow, both at national and EU levels, into a financial system which,though weakened, continues to function as it did in the past. Securitisation

ist at the national level and are deeply divided. At the EU level there are hard-ly any forces capable of taking serious action. No amount of successfuldemonstrations should blind us to this fact. The left-wing movements wereunable to take part in the integration process of the last twenty years and arelargely blocked by the divisions in their own ranks within the individualstates. This is what makes the Social Forum so important. On the other hand,various processes have established themselves at the EU level, which integrateNGOs in decision-making processes as isolated interest groups. The state ofthe left-wing movements is one of the reasons why this crisis broke out theway it did, and their capacity for change will also help shape the solutions.

Government in times of crisis

Nowadays a solution to the crisis can only be achieved with the active par-ticipation of governments. Because of the high degree of monopolisation, theadvanced level of social division of labour and the development of financialand credit systems, a spontaneous solution to economic crises by the busi-ness world itself has not been possible since the beginning of the 20th centu-ry. The course of the present crisis affords spectacular proof of this.

If we view the present economic crisis as one of over-accumulation, polit-ical instruments must be directed at:

a) guaranteeing political stability;b) organising a systematic devaluation of capital, andc) ensuring the economy is favourably positioned for the anticipated

upswing.

These aims apply to individual states, to organisations like the EU, whichin many fields acts as a quasi-state, and to international organisations. Thisadmittedly assumes that the relevant political entities can find the necessarypolitical will and recognise that this is their function and no one else’s. Theforms of intervention continue to depend on the ability of the institutions toact, i.e. on their ability to enforce their decisions.

The transition brought about by changing the European Communities intothe European Union was linked to a shift in priorities from community poli-cies to budget policy. This did not mean that community policies ceased to beimportant for the integration process, but they are less and less used as a pointof reference for centrally taken decisions. Not only that – as the number oftasks to be tackled in concert grows, the size of the EU budget is shrinking. Inrecent years it has failed to reach levels well within the realm of the possible.In times of crisis, however, the community policies were the decisive anchorthat made a forward-looking solution to the various problems possible.

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correct themselves still dominates political action. This is admittedly in crasscontradiction to the plight of the car industry and its suppliers, and increas-ingly to that of the chemicals and steel industries. But as late as March 13European Commission President Jose Barroso declared:

“There is no doubt that financial regulation needs an overhaul. But youcannot conclude from this that other sectors of the economy need the sametreatment. We should not, as you say, throw the baby out with the bath-water.”3

Against this background the attempt by the EU Commission to stimulatethe economy4 by intervening directly in the energy and communications in-frastructure was bound to fail for two reasons. First, a structural policy thatdisregards the interests clearly defined in the community policies obviouslyhas no intellectual foundation, and, secondly, the package in no way met therequirements of the East European member countries.

Nor do the ten actions laid down in the Enforcement and Emergency Re-sponse Programme (EERP) include any strengthening of public control overthe renewal processes that are after all taking place in the course of the crisis.These renewal processes are being publicly financed on a grand scale by gov-ernment loans, guarantees and subsidies. But what companies are doing withthis money is closed to public scrutiny. We may assume that hidden from thepublic eye many companies are working on alternative development con-cepts. In the car industry, for example, decisions with far-reaching conse-quences are being taken that have nothing to do with a consistent strategy ofswitching to environmentally friendly cars and will be hard to reverse later. Itis doubtful if they even take proper account of such things as the climate cri-sis. Instead the reproduction of a certain type of international division oflabour with all the problems it entails is being continued.5 The inconsisten-cy of EU policy bears the seeds of the next economic crisis. Seen in the coldlight of day, the EU’s attempts at a consistent financial and structural policyfor the crisis have so far failed. It has neither been able to find effective in-struments for reorganising the financial sector, nor to create a framework fordevaluating the relative surplus of capital. Also, its efforts to prepare the Eu-ropean economy for the period after the crisis can only be described as weak.

What scope for action remains? The social sphere and the function ofmaintaining political stability. Thus the Proposal for the Joint Report on So-cial Protection and Social Inclusion 2009 defines the following task:

“The European Social Fund should be used to its full potential in a flexibleand timely way to alleviate the social impacts of the crisis by supporting rap-id labour market re-entry of the unemployed and focusing on the most vul-nerable. Simplified implementation of Structural Funds and improved coor-dination with social policies will help. The Commission will issue a regular

continues while derivatives and other speculative securities continue to be is-sued. The causes of the crisis are being kept in place.

Even after what are virtually national bankruptcies in Ireland, Hungary,Latvia and now Rumania there are no signs of new thinking or a change ofcourse. All that is being attempted is to use loans to keep these countriesmore or less stable at least politically. What these loans are ultimately coveredby is becoming increasingly dubious as the economic crisis progresses. Theprevailing hope is that things will somehow get better.

This takes us to the second phase of EU interventions in the course of thecrisis.

It is true that the crisis originated in the financial sector. However it wasclear by November 2008 that it had spread to the whole of the rest of theeconomy. Since March 2008 industrial production in the EU 27 sank frommonth to month. By October 2008 industrial production had fallen 5.3 % inrelation to October 2007. The level of incoming orders was 17.9 % below thatof October 2007. Car production fell 21 % between November 2007 and No-vember 2008. It is now estimated that 30 % of the capacity in the car indus-try is standing idle. These obvious facts played no visible role in the stakingout of positions for the G20 summit.

Why this seeming blindness to obvious facts?

The reasons are to be found in the EU’s and its member states’ view ofthemselves as an institutional framework. The crisis is putting fundamentalassumptions to the test – above all the viability of the Lisbon strategy and theeconomic resilience of the euro zone. If it turns out that the Lisbon Treatyand the conditions of the euro zone are among the causes of the crisis, thiswould call into question the legitimacy of the EU itself.

The transformation of the financial crisis into an economic crisis is main-ly attributable to the fact that a process of over-accumulation took place inmany sectors of the economy over a long period. This became evident whenlarge areas of the financial sector began to collapse. The EU tried to react tothis with the European Economic Recovery Plan (EERP)1 in November 2008(EERP, 800 final, p. 3 and 10). It is interesting that this initiative places astrong emphasis on social stability through the European Globalisation Ad-justment Fund and the European Social Fund. The proposals are systemati-cally geared to the coordination of the four priority areas of the Lisbon Strat-egy (people, business, infrastructure and energy, research and innovation)2.They also state: “The EERP is part of the Lisbon Strategy for Growth and Jobsin the current crisis.” The structural problems that were already becoming ev-ident at this point were not addressed. The dogma of the markets’ ability to

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subject to a course of consolidation and privatisation at all costs. Loans aregenerally in euros, which increases the pressure on these states in the crisisphase. Social movements which might prevent the ill effects of the crisis be-ing passed on to large sections of the population or even organise broad re-sistance are largely absent. At the same time, however, the degree of interre-latedness is already so great that the crisis in this region is becoming a prob-lem for the EU as a whole. Austria, for example, has been badly hit by theconsequences of the crisis in this region. Germany will also have to decidewhat to do about the drop in exports to it.

This contradiction is finding expression in debates about real or allegedprotectionism. In a press article Mirek Topolanek, the Czech Prime Ministerand current EU Council President, wrote: “In my opinion, instead of gropinghelplessly in the dark and feeling our way forward with mistakes and failures,we must maintain discipline and keep a clear head. This involves fiscal rules(the stability pact), a free market without barriers, and fair competition with-out protectionism and without indiscriminate, uncontrolled subsidies.”9 Wemay leave aside the question of what illusions Topolanek associates withthese things for the Czech Republic. All he is ultimately concerned with isshifting the problems from one country to another. If, as is often said nowa-days, Germany’s trade surplus is the problem, it must of course be clearlypointed out that with the Lisbon strategy the EU member states together cre-ated the framework that made this predominant position possible and is nowchallenging it. A common market in the sense of the Lisbon strategy has pre-cisely this effect. The relationship between Germany and the other memberstates is then reproduced without anyone complaining by the common willof this EU vis-à-vis other regions such as the Third World. It is this inner log-ic of the EU strategy that is the problem. If you want a free market, this freemarket will lead to the supremacy of one participant – if you don’t want that,a free market is at best an ideological conceit. If there is an extreme asymme-try of economic power, in times of crisis the burden will be shifted onto theshoulders of the weakest – in this case the East European accession states.That the latter are now trying to beat the “old” member states with their ownweapons is understandable but unlikely to be very successful. Above all, how-ever, it is no solution to the problem.

In one sense, however, Topolanek has put his finger on the problem, whichis that basic questions of the EU’s sense of its own identity have still to beclarified. Do we want a uniform social and economic space or an alliance ofstates? Is there to be a common strategy or, ultimately, total competition? Arewe prepared to dispense with social welfare to save the economies?

In response to this question voices are raised demanding a new quality ofregulation, better coordination between the supervisory bodies, and the cre-

bulletin to monitor social trends. Reports from Member States could facili-tate exchange of information and policy experiences in the Social ProtectionCommittee.”6

But this again is more a continuation of old strategies than a new approach.The recommendations formulated by the EU Commission in February fol-lowing a study of the reports of various countries on important aspects oftheir budget policy make this very clear. They concentrate on the budgetdeficit per se, call for the continuation reforms in pensions and health care(basically a continuation of the privatisation course) and only urge the adop-tion of a stimulus package that is limited in time. Above all the privatisationrequirement is also laid down in the current proposal for the Joint Report onSocial Protection and Social Inclusion 2009.7

Any measures that are taken, therefore, will be assessed exclusively from thepoint of view of their compatibility with the aims of the Lisbon strategy.8

Even the social-stabilisation measures will have to meet the Lisbon require-ments. Not only that – the privatisation requirement feeds the financial mar-ket and consequently entails a risk of further crises.

With its Lisbon strategy the EU created a joint pro-cyclical framework thathas helped to trigger the crisis. The attempt to resolve the crisis within theframework of this strategy and using the instruments of this strategy is wild-ly unrealistic if the stability of the EU, above all its social stability, and the ide-ology of the free market are not to be sacrificed.

More of the same?

If one were to draw up a provisional balance sheet of the EU’s response tothe crisis, it might look like this: over time the EU member states have creat-ed a large number of procedures and institutions that link the crises in theindividual countries together while preventing the generation of stimuli tocombat the crises. The possibilities of a consistent stimulation policy createdby the euro and the various community policies and programmes are forcedby the Lisbon strategy into a corset that keeps giving rise to new internal con-tradictions. Social cohesion and a “free” market stand in irreconcilable con-tradiction to each other. How are competing regions to jointly develop crisis-solving strategies which amount to a devaluation of the capital invested inthem?

The dilemma is particularly clear in the relations between the EU’s “old”member states and the East European member countries, which in many – ifnot all – sectors of the economy are dependent on the “old” member coun-tries. They have practically no independent banking system, their industry ismainly geared to customers in the “old” countries, and their budget policy is

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A key question – and one that left-wing movements persistently evade –will be that of the democratisation of budget policy. This affects all levels ofthe EU. The EU member states’ fixation on a balanced budget whatever thecost was the crucial factor that triggered the economic crisis, while the short-sighted community policy of capping the EU budget is an obstacle to furtherintegration. The first step would be to set priorities for the budgets of the EUand its member states on the basis of jointly adopted cohesion and conver-sion goals. These priorities, not the goal of budget consolidation per se,would have to form the basis for decisions on joint actions by the EU. In thissense, the aim would be to achieve harmony between community policiesand budget policy under democratic, public control.

Notes

1) A European Economic Recovery Plan. Communication From the Commission to the Eu-ropean Council, Brussels, 26.11.2008 COM (2008) 800 final, p.3 and p.102) See also Communication for the Spring European Council, Driving European recovery,Brussels, COM (2009) 114 p.113) Brussels, 13 March 2009 Speaking points, José Manuel BARROSO, President of the Eu-ropean Commission, Launch of the 9th CER Lisbon Scorecard, How to emerge from thewreckage, http://ec.europa.eu/commission_barroso/president/pdf/speech_20090313_en.pdf(17.3.09)4) See: The Commission proposes € 5 billion new investment in energy and internet broad-band infrastructure in 2009-2010, in support of the EU recovery plan, IP/09/1425) Wirtschaftswoche March 2, 2009. p. 48ff.6) Communication from the Commission to the Council, the European Parliament, theEuropean Economic and Social Committee and the Committee of the Regions, Proposalfor the Joint Report on Social Protection and Social Inclusion 2009 Brussels, 13.2.2009COM (2009) 58 final p. 37) COM (2009) 58 final, p. 68) COM (2009) 114, p.9–109) Topolanek, M. (2009): Rettet den Binnenmarkt. In: Financial Times Deutschland,March 11, 2009, p. 24

ation of new supervisory bodies or even of a European economic govern-ment. Common to all these proposals is that they envisage a “top-down” so-lution. Given the EU’s own inner constitution these would all be bodies basedon the government machinery of the member countries. But would they beable to constitute and represent an overall EU interest on this basis? Thiswould necessitate finding solutions to the fundamental conflicts of interestmentioned at the outset. The fact is that we already have enough coordinat-ing bodies. That they do not have the desired effect at the macro-economic isnot attributable to their powers per se. If we take account of the divergent in-terests and the power relations in the EU, we again find ourselves faced withthe question as to how decisions can be enforced against individual mem-bers. Thus, without a change of attitude on the part of the individual mem-ber states a strengthening of the coordinating role of the EU, however desir-able, is impossible. How can one bring about such change given the weaknessof the left-wing parties and movements? Only one thing is clear: It is unlike-ly that a return to the pre-euro past would solve any problems. On the con-trary. It could be the beginning of a more radical roll-back, especially in thesocial sphere. At the present moment there are many signs that the overcom-ing of the crisis in the EU will be a very painful process.

This situation offers limited opportunities for forcing the EU or any of themember countries to budge. One such opportunity might arise out of the ne-cessity of redefining the relationship between globalisation, centralisation andregionalisation. The crisis has made it obvious that the EU’s policy has basi-cally weakened the resources of the regions for tackling crises. It might be pos-sible to form alliances that could force the EU to pursue a different course.

Realistic alternatives?

The crisis has drawn attention to a problem that has beset left-wing move-ments in all the years of the “European idea”, namely that they have neverfound anything to put up against it. There is no EU-European, let alone a Eu-ropean left-wing identity. To be sure, areas of debate are discernible that haveto be addressed in all countries, but areas offering opportunities for genuineunited action are hard to identify. The crisis will make this more difficult, asit breeds local nationalisms.

The crisis in the EU is thus also a test for the left, as it points up a contra-diction in the nationalisation process that future strategies will have to solve:How can one without loss of dynamism design an economy that excludes theneed for mass shut-downs of productive capacity? This raises basic questionsconcerning the driving forces of a future society – and what our way of lifein the near future will look like.

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The Mission of theIcelandic Left:

Rescue the Welfare Society

Steingrímur Sigfússon Ruurik Holm

ent from the rest of the Nordic countries. The income tax rate, for example,has contained only one progressive step, not the whole progressive scale cus-tomary in Nordic countries. The capital income tax rate has been a verymoderate 10 %. However, the main cause of the current crisis in Iceland, be-sides of course its export dependency, was the privatisation of banks in 2002when the problems of a lack of external monitoring could no longer be ig-nored. Having three relatively large banks operate freely in the world marketwhile they rested on a nation of only 300,000 people was like playing Russ-ian roulette – except that those suffering in the case of loss would be the Ice-landic people, not the players themselves.

Power in Icelandic society has been very concentrated in a fraternal net-work of a few rich people and the conservative Independence Party. Iceland’sfirst billionaire, Thor Bjorgolfsson, has been involved in many aspects ofbusiness life. He has, for example, been a strong figure in the Icelandic me-dia. He has also supported the arts and culture, and the combination of theseinterests with Bjorgolfsson’s media connections has resulted in a highly cen-tralised power structure in many parts of society. It can be almost said thatthe country gradually degenerated into a kind of mafioso society where get-ting your voice heard required befriending the right people. The aftermath ofthe banking crisis is thus not only about dealing with the economy but alsoabout fighting against corruption and democratising Icelandic society. Thismeans that for instance the media ownership relations will have to be re-structured to guarantee a multi-voiced and democratic public debate.

Left-Green movement in charge of the treasury

The new government in office, led by the Social Democrat JóhannaSigurdardóttir, has taken an active stance toward the threatening collapse ofthe welfare system. According to Steingrímur Sigfússon, the Minister of Fi-nance and the leader of the Left-Green Movement, one of the new govern-ment’s most important measures has been the stop on the foreclosure of peo-ple’s homes for a six-month period. Moreover, under discussion in the par-liament is a proposed law allowing people to pay, in a 3–5 year period, whatthey can of their mortgages, after which their situation is to be re-evaluated.

However, all policy measures will have to fit in the overall picture, which isextremely tight.

“We have to bring down the state deficit to zero in a period of 3–5 years”,says Steingrímur (it is customary in Iceland to use only the first name).

There has been some speculation about the actual conditions of the IMFloan to Iceland. According to Steingrímur, the details can mostly be gottenfrom the IMF internet pages and those of the Icelandic government.

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Steingrímur Sigfússon, the Minister of Finance and the leader of the Left-Green Movement, in conversation with Ruurik Holm from transform!

europe on the financial crisis of Iceland.

The wind of the North Atlantic has started to blow leftward. The crash ofIceland’s banking sector has not only wiped out some of the larger prosper-ous sectors of the country’s economy but also its long-lasting neoliberalhegemony. Now the left agenda has become the dominant one – even to theextent that right-wing supporters sometimes feel their views are no longer re-spected. The April 25, 2009 elections will show what the future will be like:either public spending cuts advocated by the right or holding society togeth-er by increased tax revenues promoted by the left.

After the so-called Kitchen Revolution, a series of huge protests in front ofthe Icelandic parliament culminating in the late-January 2009 demonstra-tions, the old coalition government led by the conservative IndependenceParty had no option but to resign. On February 1, the new government of theSocial Democratic Alliance and the Left-Green Movement took office. Sincethen, the framework of policy-making has been dictated by financial neces-sities and, above all, by the IMF rescue deal guaranteeing a $ 2.1 billion loanfor the Icelandic government for taking care of its immediate liabilities.

During the period of economic liberalisation and concentration of powerin the hands of a few rich people Iceland has followed a road slightly differ-

The Mission of the Icelandic Left: Rescue the Welfare State

Steingrímur Sigfússon, Ruurik Holm

of public expenditure will be necessary. Of course, we will need money foravoiding excessive cuts and we are prepared to introduce more taxes. For in-stance, we will let those people who are fully employed and have good salariespay more taxes. The expenditure-cutting approach advocated by the right isgoing to be harmful for the welfare state. The choice is thus clear: Do the vot-ers want right-wing methods or do they want us to do what must be done,but in a socially fair way? One additional thing is certain: The people knowwhat they already had, they know the consequences of neoliberal privatisa-tion policies. We can ask the people if they want that system again, the sys-tem that brought Iceland to its knees. The system was not only economicallyharmful, but everyday we have more information about the corruption andthe greed that existed in that system.

The EU and the euro

Iceland’s unemployment rate in February was 8.2 % and the forecast forMarch is around 9 %. By the end of the year about 10 % of the labour forceis expected to be unemployed. Although under the current circumstancesthis forecast could seem rather optimistic, the downward spiral of the Ice-landic economy has stopped. In the streets of central Reykjavik, life goes onas usual, perhaps not in as hectic a way as in the peak of the economic boom,but still the overall picture is a prosperous one. Price levels have dropped butReykjavik is still quite expensive, which means that the average salary of anIcelander of about 2,000 euros doesn’t buy much in the capital. A notablesign of recession is the halting of construction on the new concert hall be-cause of lack of funding. Another conspicuous sign of crisis is the emptinessof the vast Keflavik airport, which has about 30 departure gates for only ahandful of daily flights.

Neoliberal policies may be able to destroy a society, but if the implementa-tion of those policies is stopped early enough, society remains viable al-though possibly temporarily damaged. Iceland has become the first countrywhere a right-wing hegemony has really been brought down in a politicallyconsequential way. For the success of the left in coming years it is essential toconvince the people that it provides a socially just and economically sustain-able alternative. Considered in these terms, the Icelandic left may face theneed of more radical changes regarding ownership rights and the concentra-tion of economic power – otherwise those in control of the assets may startto dominate the course of politics again.

Holm: One main theme in the elections is whether to join the EuropeanUnion and adopt the euro as Iceland’s currency. The social democrats are in

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“Practically nothing is being kept secret. I remain a critic of the IMF, withrespect to what they are doing in third world countries and so forth, but Ice-land is a different case since Iceland is not a developing country. This is thefirst time the IMF has come to the Nordic region and the first time in over 30years that they have come to an OECD country. And they have also learnedsomething. Twenty years ago they would have come to Iceland and theywould hardly have spoken to anyone. They would not have held any pressconferences. And at the conclusion of their visit they would have told thecountry what must be done. Instead, however, the process has been a dynam-ic one, worked out in a good cooperative manner”, Steingrímur explains.

Holm: However, although the IMF is not as straightforwardly authoritarianas it is in many countries of the global South, aren’t they the ones who needto be persuaded about the adoption of any policy that may consume thecountry’s excess revenue?

Steingrímur: We decided to accept a limited possibility of raising funds fromprivate pension insurance accounts. Normally these funds are not accessibleuntil you are 60 years old. The government and the municipalities get a littleincome by taxing these payments. We have a tax deduction system in whichyou get part of your mortgage payments refunded, relative to your income.In this way, low-income people can get assistance to keep their homes. Nowwe are increasing this system enormously by putting 2.1 billion Icelandiccrowns (13.3 million euros) into it. We explained to the IMF that this is a so-cial-security measure for low-income households. After tough negotiationsand many meetings the IMF finally agreed. They said that we have arguedthis well and that they accept it.

Two options: raise taxes or cut public expenditure

Holm: The present Icelandic government is considered a transition govern-ment before the new parliamentary elections of April 25, 2009. The currentminority coalition is aiming for a majority government as polls now forecastmore than 30 % support for the social democrats and around 25 % for theLeft-Green Movement. However, one may ask how wise it is to volunteer toclean up the mess caused by the previous government and the IndependenceParty. Is there not a danger that the left will have to follow a line of policywhich may look very right-wing to the people, with cuts in the public sectorand social benefits, etc.?

Steingrímur: We will clearly differ from the right-wing option in one way:We will try to defend the welfare system in a totally different way than theydo. We won’t try to solve the crisis only by cutting, although some reductions

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fact, the króna could actually serve us very well in getting us out of the crisis.With the króna we are not bound to another currency, as Latvia is and theyare now paying the price of binding the lats to the euro. Latvia is using valu-able foreign reserves to keep that connection and they are paying the cost byhigher unemployment and a lot of problems in the economy which we couldavoid to a great extent. The króna helps us by keeping the export sectorhealthy and balance of trade positive, which is necessary to be able to payback the loans. It can be easily argued that precisely because of the crisis, re-gardless of other things, it is important for us to have our own currency.

Holm: Thank you very much for the conversation.

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favour of immediately initiating the membership negotiations, but the otherparties either hesitate or are against it. The Left-Green Movement is againstit, for reasons having to do with the general neoliberal character of the EUbut also with a view to the fishing industry, one of Iceland’s main export in-dustries. Since the new government will probably be a bi-partisan one withthe Social Democrats and the Left-Green Movement, a compromise has to beformulated with respect of the European issue.

Steingrímur: Both parties have stated that they want to continue in the gov-ernment. This is because the situation is really very simple: either you wantthe Independence Party back in power or you don’t. If you don’t, obviouslythese two parties are the main players in an alternative government. The Left-Green Movement has been very outspoken about this and we have practical-ly excluded the possibility of working with the Independence Party. The So-cial Democrats have not been quite as clear on this but they have also statedquite clearly that they are interested in continuing.

About the European issue the two parties disagree. How do we deal withthis then? Two previous governments in Iceland have consisted of partieswhich have opposed EU membership, and so does the present one. So whycouldn’t the next one also? We propose dealing with the European questionin an open manner. The ultimate decision should be made by the people ina referendum. A majority for joining the European Union could easily be theresult at some point in the future. But the danger is to end up in a situationlike Norway, where the people have already said “no” twice in a referendum.Therefore we are in favour of voting first on whether we should even file anapplication before entering into long and tedious membership negotiations.However, nothing has been decided on this and the debate is going on.

Holm: The exchange rate of Iceland’s own currency, the Icelandic króna, hasstabilised at around 1.60 króna per euro. Obviously a currency with very bigfluctuations can be harmful for the economy, and in the case of small coun-tries the currency may be especially vulnerable to external shocks. So whydoes the Left-Green Movement not support joining the EU so as to have thepossibility of adopting the euro currency?

Steingrímur: One thing is sure: the króna is going to be our currency forsome years to come. First, I think the idea of unilaterally adopting a foreigncurrency is not realistic anyway. Second, it would take us several years to ne-gotiate and ratify EU membership. After that we would have to fulfil theMaastricht criteria, unless of course we were given some special treatment.Now we are in weak position to negotiate. So the euro it is not a solution toour immediate problems. It is a dangerous illusion to claim otherwise, to sitback and say that one can solve our current problems by adopting the euro.In

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new opportunities for citizens to win back democratic control over markets.First, addressing tax evasion would lead to growing tax revenues for all coun-tries, providing more fiscal space in which to operate. Second, taming cre-ative accounting and corporate use of secrecy jurisdictions would reducetheir markets and hence also the relative power of increasingly transnationalcorporations vis-à-vis states, giving back some of the lost regulatory powersto elected parliaments and reducing the self-regulation of the market. Third,increasing transparency in accounting would also give movements of civil so-ciety a whole new set of tools for shifting the corporate responsibility debateto focus on corporate accountability. As a consequence, elimination of unjus-tified tax and regulatory advantages could help promote more corporationsat the local level, co-operatives and local banks. They would no longer findthemselves disadvantaged in the face of multinational companies who do notpay their taxes. Now – more than ever – is the time for ambitious politicalagendas for eliminating the use of secrecy jurisdictions. In recent years, civil-society organisations and progressive governments (such as Norway andmany developing countries) have developed a set of concrete, feasible pro-posals that would either strengthen the capacity of states to tame tax and reg-ulatory flight, or would create pressure by forcing the end users or facilitatorsof the offshore economy to change their behaviour. Current initiatives by theOECD and other intergovernmental organisations to fight banking secrecyare a welcome step forward, but it seems unlikely that this Spring will see so-lutions that will be comprehensive enough really to tame corporate tax eva-sion, regulatory flight and other uses of secrecy jurisdictions. The campaignsare likely to take major steps forward, but at the same time they need to con-tinue.

The long history of tax havens

The first corporate tax havens were set up in the US states of Delaware andNew Jersey at the end of the 19th century. Modern bank secrecy emerged inthe 1930s in Switzerland. After that, it took decades before the offshore econ-omy started its tremendous expansion to today’s scale. In view of this histo-ry, it is remarkable how long it took before tax havens appeared on the agen-da of international politics and global governance. The first major interna-tional attempts by the OECD to curb tax havens were initiated only in themid-1990s. While several definitions of tax havens and offshore finance ex-ist, the key characteristics are high levels of secrecy, low regulation and oftenlow or no taxes. The key problem is secrecy – the possibility of hiding theowners who benefit or other constituencies – which has led many to preferterm secrecy jurisdiction over tax havens. Many of the biggest bankruptcies

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Transparency has been a major topic ever since the explosion of the finan-cial crisis. There are several reasons for this. We need more transparency

in order to make the global financial system stabler, more predictable and eq-uitable. Transparency has also been one of the defining words in the vocabu-lary of the contemporary global economy. The crisis has increased its impor-tance even further.

The concept of transparency

Multinational companies have been eager to adopt the concept of trans-parency in their corporate social responsibility reports and statements. But asoften happens in matters of corporate social responsibility, the content oftransparency can be quite different from its form. It took the financial crisisto make politicians and corporate leaders start discussing in earnest whatkind of transparency the world economy needs, and the process is now accel-erating. An international consensus is emerging on the need for greatertransparency in the world economy and international finance, since all havean interest in preventing the re-emergence of a crisis of this sort. A critical is-sue is whether reforms will help pry open the secrecy structures of taxhavens. If successful, this would have far-reaching impact not only on the wayin which financial markets and the world economy work, but also on politics.Expanding the transparency of the world financial system would create many

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by NGOs and think tanks. The Center for International Policy published itsmost recent study on the scale of the world’s illegal money flows in January2009. The study shows that illicit global flows from developing countriesalone are on a scale of $858 – $1060 billion, with a growth rate of 18.2 % be-tween 2002 and 2006. The definition covers funds that are “illegally earned,transferred, or utilised. If it breaks laws in its origin, movement, or use itmerits the label”. The study does not cover tax avoidance or other legal usesof tax havens. Global Financial Integrity has estimated earlier that approxi-mately half of the illicit flows originate in developing countries. Tax JusticeNetwork has estimated that high-net-worth individuals have invested at least$11.5 trillion in tax havens, creating annual tax losses of 255 billion, almosttwice the budget of the European Union. It is important to bear in mind thatsecrecy structures not only help economic crime, tax evasion and moneylaundering, but can also lead to the accumulation of huge risks that will notbe noticed before it is too late.

Initiatives address offshore economy

In the last couple of years, several initiatives have been organised to addressthe offshore economy. The Tax Justice Network has gathered some of the keydemands that civil-society organisations have been focusing on in a positionpaper published in March 2009 and targeted to the G20 meeting in April. Itsthree main topics are: improving coordination between fiscal and financialregulators, international cooperation in tax matters and improved corporatefinancial transparency. While it is not possible to cover the initiatives here atany length (the entire document can be accessed from the Tax Justice Net-work website), some of the key principles include developing automatic in-formation exchange on tax matters between governments, and more strin-gent definitions for tax compliance in IMF and World Bank reports and inthe OECD. Furthermore, the initiatives cover reforming the internationalgovernance of tax issues among broad constituencies, for example bystrengthening the UN Tax Committee. These changes would have tremen-dous effect on how companies and investors operate in the global economyand the role that states can have as regulators and supervisors. First, automat-ic information exchange would free governments from massive amounts ofadministrative work required by preventative and investigative action regard-ing economic crimes and other tax matters. Currently, international cooper-ation on tax matters works mostly in the framework of information exchangetreaties. Under these treaties states agree to share information in criminalcases, i.e. when there is enough evidence to suspect someone of hiding assetsin a foreign country. There are many potential problems with the treaties. For

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and corporate scandals in the last ten years have involved misuse of taxhavens. These episodes have helped draw political attention to the offshoreeconomy. They have also helped influence public opinion and have stimulat-ed more interest in the issue. For example, Enron had hundreds of sub-sidiaries in the Cayman Islands, which it used to build a façade to cover upits huge losses. Yukos, Parmalat and Worldcom abused offshore entities aswell, with the help of major banks and the big four accounting firms. Recentnationalisations of European banks have brought to light examples not un-similar to that of Enron. British Northern Rock, one of the first banks thatwas nationalised when the crisis broke out, hid its high-risk subprime invest-ments through “a web of special purpose vehicles, many in Jersey”, theGuardian newspaper reported in November 2007. Most of the mortgage in-vestments were “cleaned” from the accounts of Northern Rock in non-trans-parent special-purpose vehicles. Nationalisation also brought attention to thetax haven operations of Fortis bank, based in the Benelux countries. It oper-ated more than seven hundred subsidiaries in tax havens such as the BritishVirgin Islands, the Cayman Islands and Panama. Accounting firms and thebanking sector have been extremely active in giving advice to multinationalcorporations and investors on how to exploit loopholes offered by secrecy ju-risdictions. Several authorities have accused banks and the big four account-ing firms of assisting in tax flight. Already in 2003, the US Senate concludedin its investigation that “the sale of potentially abusive and illegal tax sheltershas become a lucrative business in the United States, and some professionalfirms such as accounting firms, banks, investment advisory firms, and lawfirms are major participants in the mass marketing of generic ‘tax products’to multiple clients.” The most recent US Senate investigation dealing with theglobal offshore economy (September 2008) focuses on the misconduct oftwo well-known banks, UBS and LGT. In a press statement, Carl Levin, chair-man of the permanent investigative committee, noted that “Offshore juris-dictions routinely unleash anonymous corporations, hedge funds, trusts, andother financial entities on the world, and hinder international efforts to de-tect, stop, and punish misconduct. Inaction by the international communityhas encouraged an alphabet of countries to engage in offshore abuses, fromAustria to the Cayman Islands, the Isle of Man, Liechtenstein, Monaco, Sin-gapore, Switzerland, and more. It is long overdue for the world communityto take a collective stance against the offshore jurisdictions’ secretive, unreg-ulated way of doing business. The nations of the world must adopt mecha-nisms to bar uncooperative offshore financial institutions from accessing in-ternational financial systems.” Intergovernmental institutions such as theWorld Bank and the IMF have been reluctant to take the problems seriously,and most of the studies on the scale of the offshore economy have been done

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veloping countries to strengthen their mutual coordination in tax mattersand have more influence on international standards and norms related totaxation.

Country-by-country reporting

The most important initiative being promoted by civil-society organisa-tions for increasing the transparency and accountability of multinationalcorporations is called “country-by-country reporting”. Currently, multina-tional corporations have to report their income and taxes paid only on a con-solidated basis. This makes it extremely difficult to get information on howmuch tax they pay in the countries in which they operate. Furthermore, get-ting information on subsidiaries and company structure can be time-con-suming work, as information is scattered among different national databas-es. New accounting standards have been proposed that make it mandatoryfor multinational companies to publish this and other information of theiractivities in every country in which they operate. Adoption of country-by-country reporting would immensely increase transparency without entailingextra costs for companies or states. One major obstacle to the initiative hasbeen the International Accounting Standards Board (IASB) which has notbeen willing to discuss the proposal. IASB is owned by the big four account-ing firms that market tax-planning schemes and therefore have mixed inter-ests in this issue. While IASB does not have legislative power, it does play apowerful role as an international standard setter. Country-by-country re-porting would have many advantages over the current system. It would bringto light the results of the tax avoidance schemes, taking discussions of corpo-rate responsibility to a new level. Benefits would be largest for developingcountries whose tax administrations have minimal resources for inspectingmultinational companies’ accounts. In addition, the standards would give awhole new set of tools to labour unions, consumer movements and civil-so-ciety organisations.

Sanctions against uncooperative tax havens

In 1996, the leaders of the G7-countries commissioned the OECD to studyways to address harmful tax competition. Two years later, the OECD pub-lished a report called “Harmful Tax Competition: An Emerging Global Issue”.The report proposed a set of sanctions against uncooperative tax havens.This was a truly unusual demand to come from the OECD, which usually actslike a technical economists’ club. Initial reaction to the new initiative wasrather mild. It took the follow-up report in 2000 to make tax havens begin to

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example, tax evasion has traditionally not been a crime in Switzerland, whichhas assisted other countries only in the prosecution of more “serious” crimessuch as tax fraud (although this might be changing now due to US pressure).Moreover, getting enough evidence for a successful information-exchange re-quest can be a burdensome task. For example, in December 2008 Jersey Fi-nance reported in its website that the information-exchange agreement be-tween Jersey and the US had been applied only four times in the previousyear. Many new tax treaties between secrecy jurisdictions such as the CaymanIslands, Jersey, the Isle of Man, Andorra, Hong Kong and Liechtenstein havebeen signed this year, which is a clear signal that secrecy jurisdictions are nolonger tolerated in the way they have been. New treaties are a promising stepforward, but the ultimate goal has to be automatic exchange of information.The most important initiative in automatic information exchange so far hasbeen the EU Savings Tax Directive introduced in July 2005. The directive in-troduced an automatic exchange of bank account information within the EUand a few tax havens outside the union, although some member states – mostnotably Switzerland – were given a transition period. A major problem of thedirective has been its failure to address many other investment forms, such astrusts and foundations. These flaws made the directive extremely easy to cir-cumvent. Registering a trust or other legal entity is inexpensive and relative-ly easy. In November 2008, the EU Commission proposed significant changesto the directive. The new version is intended to include legal entities. The EUhas furthermore been seeking to open up negotiations with Hong Kong, Sin-gapore, Macau, Japan, as well as with Canada, Bahrain, Dubai and the Ba-hamas. Secrecy jurisdictions are currently being discussed in several formaland informal groups, organisations and initiatives, which can only be men-tioned here briefly. The EU and its Commission has been pushing forwardsome important initiatives – most notably the Savings Tax Directive. On theother hand, the World Bank and IMF have been very slow to wake up to themagnitude of the problems presented by the offshore economy.

In July 2007, the government of Norway commissioned the World Bank todo a study of illicit financial flows, but the Bank has not shown any commit-ment to the task. The World Bank’s president Zoellick condemned tax havensshortly after he took office. However, the World Bank and IMF have so faronly been able to refer to studies done by think tanks and civil-society organ-isations. The OECD has been active, but its capacity to promote concrete po-litical initiatives depends on the consent of the OECD’s member states.NGOs and developing countries have been pushing for strengthening andexpanding the mandate of the UN Tax Committee so as to transform it intoa sufficiently resourced intergovernmental body. Currently, the Tax Commit-tee has little power. An upgraded Tax Committee would help especially de-

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longer term. Increased tax revenues would strengthen states in many ways.The benefits would be largest in developing countries that would gain morepolicy space and reduced aid dependency. Taxation is, after all, the most sus-tainable way to build not only public services and other state functions, butis also the basis for the social contract between a state and its citizens.

At the same time, new forms of global governance, preferably an upgradedUN Tax Committee, could pave the way to a more ambitious InternationalTax Organisation. What alternatives are there? If nothing is done about secre-cy jurisdictions, the result will be continued tax flight, erosion of the regula-tory bases of nations, and the continued accumulation of risks in financialmarkets and within large multinational corporations. This would leave statesas powerless in the face of “markets” as they have been. Thus the key questionis whether the reforms agreed on now will really go to the core of the secre-cy structures, or whether they will just cure the symptoms. In the latter case,we could well be waiting for the next financial bubble to burst.

Notes

1) The Guardian, 23 November 2007: “How bidders took fright at the hole in Rock’s books”2) Volkskrant, 7 November 2008,www.volkskrant.nl/economie/article1074902.ece/Moet_ik_Wouter_Bos_mijn_zwart_geld_opbiechten 3) http://levin.senate.gov/newsroom/supporting/2003/111803TaxShelterReport.pdf4) http://levin.senate.gov/newsroom/release.cfm?id=3044265) www.gfip.org/storage/gfip/executive%20-%20final%20version%201-5-09.pdf6) www.taxjustice.net/cms/upload/pdf/TJN_0903_Action_Plan_for_G-20.pdf7) www.taxjustice.net/cms/upload/pdf/TJN_0903_Action_Plan_for_G-20.pdf8) Chavagneux, Christianja / Palan, Ronen (2007): Europe Leads the Fight Against TaxHavens. In: Tax Justice Focus, Vol 3, No 3.9) Sharman, J. C. (2006): Havens in a Storm: The Struggle for Global Tax Regulation. Cor-nell Studies in Political Economy.

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realise that their sovereignty – and businesses – was being threatened. As a re-sult, small tax-haven states organised to lobby some of the key states to rejectthe OECD’s initiative. Key targets included the UK, the USA, Canada andNew Zealand. Many of the small island states are members of the Common-wealth, which helped in persuading the UK. Jason Sharman has documentedthe process in his excellent book “Havens in a Storm: The Struggle for Glob-al Tax Regulation”. In the US, a right-wing think tank called Center for Free-dom and Prosperity (CFP) launched lobbying efforts to change the publicmood into one of opposition to the OECD’s initiative. The CFP, with only asmall staff, managed to get articles into the press that framed the OECD andits initiative as a “global tax police” – a characterisation that can hardly havea positive effect in the US. It is interesting that at the time, George W. Bush’sgovernment was at first undecided as to how to position itself in relation tothe OECD initiative. As a consequence of the CFP’s slander campaign, the USofficially withdrew its support on May 10, 2001. Some other key states turnedagainst the initiative, almost completely watering down the OECD’s blacklist.However, September 11th forced the US to put some pressure on secrecy ju-risdictions – at least temporarily – but the sanctioned blacklist was no longeran option. The example may seem discouraging, but it also shows that in theright political climate very ambitious demands for global regulation couldsucceed. If even the Bush administration did not initially have a fixed posi-tion on sanctioning the use of tax havens, why should any other government?It is difficult to think of a better moment for pushing these issues than thepresent. The key issue will be to articulate to a wider public that at the mo-ment transparency has totally different meanings for ordinary citizens andlocal companies on the one hand, and global finance and multinational cor-porations on the other – and that there are solutions for bringing things intobetter equilibrium. For ordinary citizens, transparency means state interven-tion in many everyday activities – often even more for people living on gov-ernment allowances. For global finance and multinational corporations, es-pecially when it comes to taxation, transparency has long been completelyneglected. This is the contradiction that should be utilised in order to pushforward ambitious agendas to tackle secrecy jurisdictions and the offshoreeconomy. Much of the faceless “corporate power” of the contemporary glob-alised economy has actually resulted from the lack of transparency in corpo-rate accounts, allowing massive tax avoidance, tax evasion and regulatoryflight. By ending these loopholes we can bring part of the privatised regula-tion back into the hands of elected governments. This would not mean loadsof “new” regulation. Instead, it would make the playing field more equal be-tween small and large companies, as well as between ordinary citizens andthe super-rich. It could also mean more space for democracy, especially in the

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The Urgent Call for a

Society of Solidarity

Institut für Gesellschaftsanalyse der Rosa-Luxemburg-Stiftung

Neoliberal responses to the over-accumulation crisis

The crisis of neoliberal financial-market capitalism broke out in the centreof the system and has a key systemic cause: it was triggered by a previously un-recognised autonomisation of the financial sphere with respect to other eco-nomic fields and the inclusion of all social fields in speculative financial busi-nesses beyond any possibilities of social or state organisation.

Fundamentally, in the face of the real relations of forces, different ways ofovercoming the current economic crisis are thinkable and are to be viewedfrom as historical a perspective as possible. All of these thinkable ways out ofthe crisis are of a political nature and do not emerge spontaneously from theeconomy. They all presuppose active dimensions of the state. It would be a ca-tastrophe if the economic crisis were to be associated with a collapse of suchdimensions of the state.

One can attempt to direct the surplus capital into new fields of investment.A current possibility, in no way to be discounted, is also an inflation policy, in-separable from extreme social and international tensions. The opening up ofnew fields of accumulation and the inflationary devalorisation of capital canalso go hand in hand. If the current tendency of over-accumulation of capitalis not stopped, the explosive material of an even greater financial, economicand social crisis will build up.

The social crisis of financial-market capitalism and the necessity of system alternatives

Whether or not the momentary crisis becomes a systemic crisis is an openquestion. As a structural crisis of capitalism, however, it is in many respects asocial crisis of capitalism.

First: with the crisis of the radical market mode of regulation whose ex-posed expression is the financial crisis, the ideology of neoliberalism has beenshaken.

Second: neoliberalism has brought forth structures that are not viable. Im-portant goods for a life with human dignity were produced in a completelyunsatisfactory way. The current crisis pushes large parts of global society intogrowing insecurity and increasingly leads to rebellions on the part of thosehardest hit in the foreign and domestic peripheries. Protest and resistance areforming on all levels, still fragmented and frequently without clear direction,but they are growing.

Third: democratic governmental forms have been implemented in manycountries in the last twenty years. At the same time, the social, economic andcultural basis of democracy is being undermined.

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The brave new world of neoliberalism lies in ruins. Its wealth turned out tobe robbery, sham and deceit. The left is in a new situation. Without its self-

transformation and the development of a capacity to act that is adequate to thetimes, it will squander for a long time to come any possibility of becoming aforce of social, ecological, democratic and peace-promoting social transforma-tion beyond capitalism. This paper, presented here in a shortened form, aimsto contribute to the discussion of the strategies of a left that is renewing itselfwithin the crisis of neoliberalism.

Neoliberalism in crisis

The hard-pressed, insecure, plundered polity is supposed to pay the bill of amore than thirty-year long orgy of redistribution from bottom to top, fromthe public to the private. Millions have lost not only their jobs, but also theirhomes and pensions. The financial crisis is intertwined with a cyclical eco-nomic crisis and the exhaustion of previous fields of growth of a self-centredsociety and the information technology revolution. At the same time, the costsof global warming are exploding and removing from hundreds of millions ofpeople the bases of their livelihoods. There is the danger that the interwoveneconomic crises will lead to more repression and to stronger constraints oncompetition and that the solutions found by the elites will become the lever ofa perfected system of neocolonial exploitation.

The Urgent Call for a Society of Solidarity

Institut für Gesellschaftsanalyse der Rosa-Luxemburg-Stiftung

(Effi Böhlke, Lutz Brangsch, Michael Brie, Mario Candeias, Erhard Crome, Judith Dellheim, Conny Hildebrandt, Christina Kaindl, Dieter Klein, Günter Krause and Rainer Rilling).

the US economy and to deal with the crisis of reproduction and jobs as wellas to offer new kinds of consensus to the lower social groups. A public NewDeal is supposed to provide the reconditioning of the general conditions forthe reproduction of capital.

A green New DealA green New Deal comprises a state-initiated and massively subsidised tran-

sition (transformation) to an “ecological” mode of production that opens upnew fields of accumulation for capital seeking investment possibilities (thefurther commodification of natural resources in the field of biodiversity orgene technology; technologies for ecological increase in productive efficiencyand energy conservation); new investment and speculation possibilities openboth new markets in certificate or emission trading and in ecological con-sumption. Nature and environmental protection becomes a commodity,which limits the possibilities of solving the ecological crisis. The green NewDeal is thus not the solution of the ecological crisis; rather, it is the attempt atits development in the sense of a re-establishment of expanded capitalist ac-cumulation and hegemony over the inclusion of progressive oppositionalgroups and interests of the subalterns.

Millennium goals and the struggle for a more just world order Global catastrophe or global cooperation – tendencies towards a global co-

operative capitalism are intensified under the pressure of this alternative.A great signal for the cooperative reduction of poverty in wide regions of

the globe was the decision on 8 Millennium Development Goals at the Mil-lennium Summit of the United Nations in September 2000. Supplementarysteps were agreed upon at previous and following conferences. However, thereality in the developing countries belies the weakness of international coop-eration against poverty.

Tendencies toward international cooperation are exerting an effect on glob-al environmental politics. In the last minute of the negotiations during the en-vironment conference in Bali in December 2007, the USA, still under Bush’spresidency, saw itself constrained to vote for a compromise proposal, whichopened the way for Kyoto follow-up controls. The ecological components inObama’s economic programme confirmed that.

The emergence of an entire range of variations and the competition provided bypost-neoliberal developmental paths

The Washington consensus was already delegitimated before the crisis; afterthe crisis it will be completely gone. The USA and Europe cannot alone deter-mine the rules of the game, nor is a transnational consensus recognisable.

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Fourth: neoliberal capitalism has also squandered its legitimation on theterrain of domestic and foreign security. In the Iraq War, the imperial claim toestablish order in every region of the world according to the paradigm of theWest, and with military violence when other methods were not available, hasfailed. Expenditure on armaments and war are preventing the financing of de-velopment in the South and of public services even in the rich countries.

A new orientation of social forces

Very diverse forces are working on projects, tendencies and scenarios for thereestablishment and/or development of bourgeois capitalist domination. Justas in the crisis of Fordism from 1968 on, different crisis factors are coming to-gether, which are met by an intensification of the old mechanisms of regula-tion, at the same time as something new is already coming into existence. Thefollowing tendencies within neoliberalism, which at the same time point be-yond it, are developing at the moment in parallel:

A new state interventionismThe rulers are reacting to the crisis by rapidly and suddenly changing the

open, decades-long contempt for the state – in reality, always active even inneoliberal capitalism. This contempt is giving way to massive state interven-tions. The state rescue actions also include elements – even if very limited – ofa consensus in favour of support for low-income social groups, the limitationof manager incomes and even in favour of at least a consideration of state par-ticipation in industrial enterprises. The bank rescue packages were followedby anti-cyclical state programmes. Within the EU, the Lisbon Strategy, despiteall its problems, has been maintained.

The regulation of the financial markets and the struggle over a new Bretton WoodsThe future of the global financial system has now become the centre of the

debate: both restorative forces, that want to use the state and its finances forthe re-establishment of the old order, and “crisis gamblers”, who want to winfrom the crisis, are pitted against reformist initiatives that clearly want to gobeyond the previous status quo. A real break with neoliberalism, however,cannot yet be discerned.

A public New DealWith the renewal and the reconstruction of the public sphere, especially

through new investment programmes in public infrastructure, education andhealth systems and the creation of new jobs in those branches, particulargroups around President Obama are attempting to make up for the crash of

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implemented in an intensified form against oppositional positions, and alsoin social policy: the bolstering of police and the broadening of their scope,along with the “punishment of the poor”, are supposed to guarantee the lat-ter’s assimilation and prevent their unrest.

For its own hegemonic project, authoritarianism is certainly not sufficient,since its attractiveness and economic potential remain limited. Just as bio-dic-tatorial measures are only imaginable as a tendency within other hegemonicprojects or for limited and defined regions and locations, so authoritarianismsand even elements of fascistoid politics can only have an effect if they are com-plementary to other projects and support them.

What is to be done? Left politics in times of crisis

The depths of the current crisis will not lead to the implementation of en-during solutions in the short term. The still unbroken predominance of theneoliberal forces of financial-market capitalism blocks fundamental alterna-tives. There is a constellation of openness and of transition that can perhapslast a decade. Since many fundamental problems will not substantially be dealtwith, the danger of even worse financial, economic, ecological and social crisesgrows.

The rulers are divided. The conflicts of interest and confrontations that arelinked to this, the unavoidable search for compromises and the consequenceof ever new partial steps, offer the left the opportunity of bringing its own po-sitions to bear.

In large parts of German society, however, Die LINKE, the unions and manysocial movements have in fact so far not been given a capacity for building thefuture. In Europe, it is not the left that determines the agenda. Globally as well,the positions developed above all in the context of the World Social Forumprocess, while certainly strong enough to question the legitimacy of neoliber-alism and the current search for solutions from above, are still too weak to in-tervene directly in setting the course.

The chief task of a renewed left will be:l to connect the resistance to the shifting of the consequences of the crisis

onto the wage workers, the socially weak and the Global South, on the onehand, to the development, on the other, of a perspective oriented to the valuesof global solidarity, to organise social struggles and to network;

l to create room for collaborative work and self-organisation of protago-nists who are ready to develop alternatives and to live them;

l to confront, with great decisiveness, the reactionary solutions of contin-ued expropriation, de-democratisation and new wars;

l to prevent the conservative continuation of neoliberalism by other means,

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In South American, strong social movements have toppled governments,centre-left governments have been brought to power, participatory approach-es to politics and economics based on solidarity have been deployed, and in-digenous movements have forced an acceptance of another way of dealingwith representation, public life and property.

Also, in India, strong movements of peasants, the landless, “untouchables”and networks critical of globalisation have been formed. Even more clearly,China’s state capitalism or the investment policies of the Gulf states seek –from above, of course – to bring capitalist dynamics and state-controlled de-velopment, through a selective opening, to another level, and thus to deter-mine (more) independently the future of their countries. In Scandinavia, de-spite neoliberal hegemony, various elements of another type of capitalismhave at the same time been maintained.

Internationally, inside the WTO another G20+ was formed, as a loose unionof countries of the “global South”, in order to create something as a counter-weight to the negotiation power of Europe, the USA and Japan and tostrengthen the position of the “global South”. Whether or not these develop-ments will lead to the formation of a new capitalist bloc with its own hege-monic political or imperial ambitions, is still not clear.

As counterweights to the transnational institutions like the IMF, the WorldBank or the WTO, regional integration projects have been promoted that gobeyond them, like Mercosur or ALBA in Latin America; cooperation betweenChina, Japan and South Korea or the ASEAN states is slowly being deepened,and regional development banks like the Banco del Sur have been founded.

Nevertheless, we should by no means overlook the fact that people in Africacontinue to be worn down and are massively confronted with free trade de-mands. The Millennium Development Goals were not reached.

A new authoritarianismFor years now, we have seen a right movement on the part of particular so-

cial groups. The precarisation of modes of labour and life and the thinningout of the so-called middle classes is linked to the return of strong exclusion /respectability boundaries, authoritarian educational and service notions aswell as an exacerbatim of immigration politics and exclusion. With the as-sumption of government power by unambiguously right-wing parties, thereis the attempt to forge a social consensus, under the banner of nationalist ap-peals, between the upper and lower strata of society.

In terms of foreign / imperial policy, the war on terrorism is emphasised asa war of cultures and linked to the intensification of security and control poli-cies. The asylum and immigration policies of the EU aims overwhelmingly ateconomic gain and treats people as “security risks”. Repressive measures are

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are all important forms of learning and education in this situation. Forms likesocial accounting from below or the monitoring of budget policies are furtherexamples of forms that aim at education through transparency.

The confrontation with the causes and the global consequences of econom-ic crisis must lead to one’s own culture of resistance in the face of all the inse-curities and dangers. Precisely in crisis periods, left-wing movements need tosee themselves as networks where solidarity can be lived and security can befound.

Putting concrete alternative projects on the agenda

Left-wing movements must in particular work where they are strongest –and this means above all on the local and municipal level and in the work-place. It is necessary to foreground political actions which similarly aim at theimplementation of democratic forms of social regulation and against shiftingthe consequences of the crisis onto society. The struggle against poverty: 2010in the EU is supposed to be the year of fighting poverty. Its effective prepara-tion and realisation should not be subordinated to “the crisis”.

Redistribution from top to bottom and from private to public: The accumu-lation of wealth in the hands of ever fewer people and social groups is a mon-strous nightmare for society. Part of the appropriate response would be the re-moval of social security from the grip of the financial markets and the renew-al of the social security systems on foundations of democracy and solidarity.

The socialisation of the finance sector: the financial system in its totalitymust be brought under public control. It is to be geared to the needs of mu-nicipal and regional development, to the support of projects of supranation-al integration and cooperation in solidarity.

First, there must be assurances that the cooperative banks and municipal sav-ings banks are maintained and democratised. Second, there must be a funda-mental re-organisation of the business model of public banks. The EuropeanCentral Bank (ECB) must be drawn into the dialogue on European economicstrategy alongside the Council and the European Parliament. There should bea further structural pillar: a council or a board of civil-society actors.

Economic democracy: all enterprises and workplaces must be compelled toadopt co-determination. The economy should no longer remain a democra-cy-free space. Here we need the development of alternative economic modelsin the context of factory- and enterprise-level co-determination and beyond.Central here in the current context of the crisis is the question of the future ofthe auto industry and armament production, but also of those sectors that arenow promoted in the context of ecological modernisation. Public supportshould proceed in the form of direct enterprise participation by the public au-

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l to support progressive forms of state intervention, of renewal of the pub-lic sphere, of socio-ecological transformation and solidaristic global develop-ment;

l and in all this, to develop approaches to a transformation beyond capital-ism, as well as to introduce and to realise steps toward socio-ecological trans-formation with the implementation of elements of a society based on solidar-ity.

All of this requires transformative processes within the left movementsthemselves, transformation of the relations among them and the ways of liferepresented by them.

The strategic triangle of left politics

The left can intervene simultaneously on three levels: by protest, critiqueand education, struggle over the interpretation of the crisis and the develop-ment of solidaristic forms of process, as well as by intervening in decisiveprocesses and practical organisation. It must prove itself within the strategictriangle of left politics, that of (1) social learning, (2) the broadest coalitionpolitics and (3) the transformation of social property and power relations.

Education and the effective development of common alternativepositions in the public sphere

Emancipatory educational work in unions, social movements, citizen initia-tives, in firms, schools, universities, in parties and churches as well as in themedia and in the parliaments is the condition for overcoming the culturalhegemony of neoliberalism and its guiding principles of a market society, anauthoritarian state and of people as entrepreneurs of their own labour powerand life services. Education means, against this background, creating thefoundations for common acting in solidarity and encouragement of the self-organisation of all protagonists interested in alternatives from the local to theglobal level.

The left should advance proposals, in parliamentary and also in extra-par-liamentary contexts, that pick up on and push further determinate aspects ofthis agenda (reconstruction of the social security system, tax reform, state in-tervention in private property rights, capital regulation, ecological transfor-mation, conjunctural programmes, security policy, etc.).

In conditions of economic crisis this struggle must be tied to a new interna-tionalism. Mass propaganda using concrete examples demonstrating thatthings can be different, the promotion of forms of exchange of experience, inwhich the experiences of the individual can become a common good.. these

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For a free public transportation system: An essential step in social and eco-logical transformation would be the implementation of a transition to a pub-lic transportation system that would make it free for the users and ensure highlevels of individual mobility also for socially weak groups.

Peace policy and commitment to global development in solidarity: We needan increased capacity to build the future in more parts of the world as a pre-condition for sustainable development in the world in general: the securityand defence policy strategies and guiding principles of the EU and its mem-ber countries should be subjected to moratoria. Wide-ranging debates at allpolitical levels should clarify what “security in a globalised world” means.

For a society of solidarity

The era of a lack of alternatives is over. If the rulers are compelled to addresssystemic causes, then possibilities of intervention from the left and from thebottom strata of society also open up. But how can they be unleashed andused? It is time to put on the agenda the perspective of a transformation thatpoints beyond capitalism, the goal of a society of solidarity.

The socialisation of losses can and must be opposed by the demand for so-cialisation of the control over property. Aid for the industry of the fossil-fuelepoch has to be replaced by a conversion to solar energy sources. The leftshould respond to the announced return to a failed “social” market economywith the demand to proceed in the direction of a society of solidarity with asocially and ecologically regulated mixed economy with strong public, com-mon economic sectors as a step in the direction of a socio-ecological transfor-mation. The continuation of a politics of world trade and development in theinterests of the North can be opposed by the concept of working together insolidarity.

If it is widely thought that what is needed is simply better informing theself-centred private individual, the Homo Oeconomicus, and making himtake more explicit responsibility, then the left should stand for another con-cept of the human being – that of self-determined acting people who taketheir own matters into their hands solidaristically and strive for the wholerichness of life.

The concept of a society of solidarity is a concept of the re-appropriation ofthese productive forces with the goal of overcoming the destructive tendenciesof the last decades and the awareness by the masses of their own power tosolve the problems of the world together. This regards all levels – the local, theregional and the global. Another world, a world of solidarity, is not only nec-essary; more than ever it is also possible.

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thorities, and be linked to an extension of co-determination rights, includinga new type of co-determination of the regions as well as of ecological and con-sumer organisations, and the obligation of orienting themselves to socio-eco-logical transformation. This is at the same time the foundation of a broadsupport of small and middle-sized enterprises.

Democratising democracy: Democratic cooperation and radicalisation ofdemocracy are important forms of learning about politics, about power rela-tions, about room for manoeuvre and the limits of society. They legitimate al-ternatives and resistance, they can be used in order to establish a space for sol-idaristic action. This calls for democratisation of budgetary policy throughpublic budget analysis and participatory budgets as well as support of initia-tives for remunicipalisation, in order to delegitimise the integration of munic-ipal finances and public property in speculative businesses as well as in ques-tionable concepts of budget consolidation.

Politics of new full employment and decent work: It is time to re-orient theidea of publicly supported employment sectors away from its current charac-ter of superficial post-illness intervention, and instead in the direction of newactive and democratic economic and social structures. Publicly supported em-ployment sectors should be understood as a process of the creation of newspaces of cultural and social-service delivery, self-organisation and initiativefrom below and integration of solidarity and thus as a basis of new directionsof an economy of solidarity as well as of the development of economically andsocially sustainable business.

An educational system of solidarity and the renewal of public spaces ofdemocracy and culture: Social transformation is only possible if access to ed-ucation, democratic cooperation, art and culture are decisively transformedand the social selection within the educational system is overcome. Here weneed fundamental reorganisation of the education system, beginning with theextension of an integrated early childhood support, the introduction of com-munity schools as “schools for all” and places for being together solidaristical-ly, the providing of a meaningful life in childhood and youth, of the interrela-tion of learning, playing, mutual help, democratic co-determination, of self-development and of practical social projects.

Renewal and democratisation of the municipal economy as a central axis ofeconomic-political initiatives with the focus of energy provision, health careand transportation. Connected to this would be a corresponding qualificationof the labour of municipal representatives within monitoring bodies in thesense of a real participatory communalisation of public services beyond theold patronage economies and paternalistic welfare. The municipal economymust be the point of departure of a socially and ecologically oriented region-alisation of economic cycles.

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The “Refoundation of Capitalism” and the

New Challenges for the Left

Michalis Spourdalakis

Approaching the Crisis

Euclid Tsakalotos

Radicalising the Agenda: the Left’s Response

to the Crisis

a solid solution to this question. Nevertheless, there is great need for an an-swer, which is of capital importance to our movement.

After the Bretton Woods agreements and the Keynesian post-war periodhad deeply changed the capitalist system, changing the form of society knownup that point, and adapting the economic system to the new historical andgeopolitical conditions of those times, and after, this “new” model had itselfbeen replaced (with the decisive impulse of the governments led by Reaganand Thatcher) by the neoliberal approach, which became a new and dominantform of capitalism that lasted until the present, are we now witnessing the be-ginning of a new phase of capitalism and a new model of economic organisa-tion that is going to replace neoliberalism, in Europe and globally?

We still do not know. As we also do not know exactly what the eventual neweconomic and social configuration of this post-2009 capitalism will be. Wedo not know, but I think that even the protagonists who are designing andproposing it do not know themselves how to answer the same question, be-cause the new model is still on the drawing board, and its guidelines are stillto be defined more precisely. This starting period of the new phase is neces-sarily characterised by deep uncertainty, but also by a strong dynamic; theoutline of the project (if there is one) will surely become sharper and clearerin the near future.

Gaps and delays

In fact, we still do not have enough consistent and solid data to support thethesis that we are facing a real change of phase and that a post-neoliberal cap-italism is at the door. But, although this is still not a clearly arguable thesis, itseems that we can see enough signs that we cannot avoid considering it as ahypothesis, and a quite plausible one.

However, one thing we know for sure: if this change really takes place, itwill have major consequences for all of the critical movements, because ourtools for combating neoliberalism theoretically and politically will not be ad-equate for the struggle against, and the critique of, the new form of capital-ism. If we engage in the new struggles equipped only with our existing anti-neoliberal arguments, we will surely miss most of the target.

We must recognise that there will necessarily be a gap between the emer-gence of the new form of capitalism and the moment when we are able toform our answer to it. We cannot avoid this gap, because any critique canonly be completed after the object of critique is minimally defined and con-solidated.

However, despite this unavoidable gap, what we do have to avoid is the dan-ger that it may become too wide, that is, that the answers to the new situation

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We are dealing with a highly volatile reality, and many statements, docu-ments and decisions of government leaders, namely in the framework

of the preparatory process of the London G20 meeting in April 2009, are in-troducing new aspects to the question debated here. It may happen that thesenew elements will very soon render the present text out of date, perhaps evenbefore you read it.

One of the points in the paper I prepared for the WSF seminar dealt withWalden Bello’s proposal to name the new phase of capitalism “Global SocialDemocracy”, presented in a text published shortly before the WSF1. I fullyshare Walden Bello’s opinions on the subject, but I think this designation isnot completely adequate nor very effective from the left political communi-cation point of view.

A new phase of capitalism?

Will the present crisis, and will the measures being adopted by the govern-ments to overcome it, lead to a genuinely new phase of capitalism? Or are theannounced measures, which are intended to create a “refoundation of capi-talism”, just provisional and reversible acts, wrapped in a lot of demagogicrhetoric, really aimed at changing only what is necessary in order to keepeverything the same?

The truth is we still do not know the answer. It still seems difficult to find

The “Refoundation of Capitalism”and the New Challenges for the Left

Renato Soeiro

and consequently it is too early to name them adequately. But second, be-cause the expression “social democracy” corresponds to a set of ideas and so-lutions that have, still today, a positive connotation for a significant sectionof the European working class, especially after having resisted in the lastdecades the neoliberal destruction of their rights, won through what theyperceive as social-democratic post-war policies. There are still some illusionsin the European workers movements that leads it to find a solution to thepresent problems by looking back to the glorious 1930s and to social democ-racy. And, for them, if social democracy is to become “global”, so much thebetter, because the globalisation of the so-called European social model is adream (better: an illusion) of many left, or rather centre-left, politicians andtrade unionists. There is no advantage to linking this new Sarkozy-Merkel-Brown-Barroso project to this illusion. Not only because the wheel of histo-ry will not be turning backwards, not only because these times were far fromunproblematic for the workers, contrary to what social-democratic propa-ganda sometimes suggests, but mostly because what the capitalists and theirgovernments are preparing now is quite likely much different from any formof social democratic turn back. In conclusion, I find that this proposal byProfessor Bello may not be the best solution. But, as the problem is so wellpresented in his papers, he is probably in a very good position to be the oneto find a more adequate solution to the “naming” question, a solution thatcorresponds both to the analysis of the new phase and, at the same time, tothe need for effective political mass communication.

This text is a summary of the paper read at a seminar organised by Transform! at the World Social Fo-rum in Brazil in January/February 2009. It is an explanation of ideas which appeared in a short com-muniqué by the author published last October at www.esquerda.net, www.rebelion.org and elsewhere.

Note1) Bello, Walden: The Coming Capitalist Consensus. www.fpif.org, a project of the Institutefor Policy Studies, December 27, 2008

take so much time to generate, that during the big European and nationalelectoral challenges of 2009 – which will define our political landscape forsome years to come – people will be presented with innovative (at least ap-parently innovative) proposals originating from the camp of “capitalist re-foundation”, and with outdated anti-neoliberal positions from the anti-capi-talist side, which refer mainly to the characteristics of capitalism’s previousphase, the same characteristics that our opponents will be rejecting and crit-icising.

This would create an incommunicability in the political debate, very dam-aging to our side, which would appear out of phase with the historical tran-sitional moment we are living through.

Producing theoretical analysis

The left has to face the task of producing theoretical analysis on this newphase of capitalism, but it has also to be effective in communicating its crit-icism and proposals to the public in general. And we all know that we cannotreally diffuse our critical ideas on the new “real capitalism” broadly withoutsomehow naming it. “Naming the enemy” is known to be an indispensablestep in any mass struggle. We have used the name “neoliberalism” for the pre-ceding phase and this has helped us communicate (that is, render sharable)our critical view of this system of values and the economic and social poli-cies associated with it. So far, we still do not have a name for the new policiesthat are being drawn up by most governments and institutions to face thepresent crisis. And we need it. This process of finding a good name must re-flect the maturity of the analysis of the object, and the conclusion to bereached will be itself a result of this analysis. I think we are not there yet.However, Walden Bello has recently written an excellent paper published byForeign Policy In Focus (FPIF) under the title “The Coming Capitalist Con-sensus” where, after asking “how decisive and definitive the break with ne-oliberalism will be”, he argues that a “new national Keynesianism alongSarkozyan lines, however, is not the only alternative available to global elites.Given the need for global legitimacy to promote their interests in a worldwhere the balance of power is shifting towards the South, western elitesmight find more attractive an offshoot of European Social Democracy andNew Deal liberalism that one might call “Global Social Democracy” or GSD”which “is neoliberalism’s most likely successor”. I fully share most of WaldenBello’s views on this issue (and on many others), but I find that his proposalfor naming the new capitalist phase is problematic – at least from a Europeanperspective. First, as mentioned above, because it is perhaps too early to drawa full portrait of the new capitalist solutions which are still being designed,

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ty. The technocratic and mainly economistic understanding of the crisis bythe people at Davos does not focus on the interests of working people, atleast in a direct way, and mainly discards the concerns of thousands ofmovements that have sprung from the contradiction and inequalities of the(capitalist) civilisation of our epoch. In contrast, we, the participants inBelém, see the crisis through the eyes of the billions of people who are, in asense, represented in our Forum.

Having said that, I would like to put forward six points or axioms in an ef-fort to establish an analytical framework for the issue under discussion.

Six axioms

First, it is very important for the left to realise that part of its struggle inthe current conjuncture of the world capitalist crisis is to be present and tointervene effectively in the debates on the crisis. Its presence in the shapingof post-crisis hegemony, which will define the framework within which so-ciety will be organised after the current turmoil, is essential not just for itsfuture but is vital to the prospect of changing the balance of power in a waythat will undermine capitalism and its pillars of support. The left, in otherwords, cannot afford to be absent from the redefinition of the hegemonicorientation as it was in the early 1970s crisis when the left’s weakness led toa landslide victory for neoliberalism, which resulted in what has probablybeen the most aggressive capitalist onslaught of the last two centuries.

Second, the left should be tempted by short-sighted explanation of crisis.The media and mainstream political forces have attempted to define the cri-sis as an incidental disruption of a system that functions harmoniouslyoverall. In fact, these popular explanations promoted by key opinion leadersattribute the crisis to the initiatives or the omissions of the governments inthe last decades or to the capacities and/or the orientation of certain indi-viduals in the central banks or to the composition of international econom-ic institutions or even to the greed of the so-called golden boys. Althoughthere is no doubt some truth in all these explanations, it is nevertheless naïveto imagine the current capitalist economic turmoil as the result of subjectivefactors and/or managerial mishaps. On the contrary, as the crisis unfolds, itis becoming more and more clear that it is mainly the result of the systemiccontradictions of capitalism. These are contradictions which have to dowith the way capital configured its domination over labour namely in thelast three decades, domination that was based on the intensification of ex-ploitation achieved through the freezing of real wages and the imposition ofaggressive flexible industrial relations.

Third, the radical left should restrain itself from generalisations to the ef-

The current crisis is casting its heavy shadow on the Davos Economic Fo-rum, which has begun its annual meeting. This is only natural and in

fact the crisis that has broken out over the last six months tacitly or explic-itly appears to be the main preoccupation of our Forum as well.

However, there are some important differences in the way the Davos par-ticipants are approaching the crisis and the way we, the people gathered inBelém, are doing so. Besides the disproportionate publicity that the discus-sions among a few dozen individuals have received in Davos, as opposed tothe virtual silence of the international media on the discussions, concernsand mobilisation expressed by the one hundred thousand participants ofthe WSF, there are two important differences. First, the people at Davos arestruggling to analyse and define the crisis in such a way that will provide so-lutions for securing the reproduction of the structures, the relations and,first and foremost, the logic of capitalism. Second, the problem of the diag-nosis in Davos is, as the reports have so far indicated, that it has syste-matically ignored the social forces that could possibly play a role in reform-ing and even in transforming the given (capitalist) social organisation ofsociety.

In juxtaposition to this, we, the participants at the WSF, intuitively or sys-tematically, tacitly or explicitly, are in effect attempting to approach and un-derstand the crisis in such a way that the responses to it will not end up re-producing the previous regime ante, that is, a well-greased capitalist socie-

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Approaching the Crisis

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brant promise that the new hegemony which emerges from the current cap-italist turmoil will be grounded in our social concerns that put people aboveprofits and quality of life above the further exploitation of nature.

Paper for the Seminar “Analysing Global Crisis: Systemic, Capitalist or Just Financial Crisis?” organised bytransform! europe at the World Social Forum in Brazil 2009.

fect that “capitalism is in permanent crisis”. It is one thing to underline thefact that capitalism has inherent contradictions and another to deal with itas if it were in a state of constant crisis. The latter leads to passive politicalstrategies, to strategies that expect capitalism to collapse as a result of thecrises generated by its own contradictions.

Fourth, continuing the previous point, our understanding should eschewthe conclusion that an economic crisis will resolve into a political crisis. Thistype of reductionism, which is quite common on the left, ignores the differ-ent modalities of crises and assumes that capitalist difficulties lead to pro-gressive, and even radical, political solutions. This assumption is anythingbut verified by historical experience.

Fifth, the radical left’s analysis, and its response to crisis, should be basedon the understanding that capitalism has enormous capacities to respondand even resolve crises. In fact, as historical experience has shown, capital-ism has enormous capacities to absorb its contradictions and to adjust toever changing conditions. In this capacity, the state plays a key role. The statehas always been the pillar in securing the reproduction of capitalist relationsand the overall logic of societal organisation. This was so even in the heydayof neoliberal domination in which the state is supposed to be minimal andmost of its functions taken over by the deified market. Of course the state’seffective fulfilment of this role depends on the resistance offered by popularstruggles. It is, in other words, the outcome of the political struggles that willdefine the direction, the content and the limits of the state’s intervention inits effort to regulate the rehabilitation of capitalism.

Sixth and finally, although the economic crisis does not necessarily lead toa political crisis, one should not exclude the possibility of the latter. Further-more, given the key role of the state in social reproduction, when we witnessa coincidence of economic and political crises we should not assume thatthe state has been incapacitated and cannot re-establish capitalist hegemo-ny. In fact, the appearance right now of just such a dual crisis simply makesthe challenges as well the opportunities for the radical left all the greater.This is because the coincidence of an economic and a political crisis usuallyreveals cracks in the hegemonic discourse of the system and could opengreat opportunities for those who wish to transform it. This opportunitywill however not be on offer for long. The offer stands only until the inge-nuity of state power manages to rise to the new tasks required by the con-juncture and manages to construct the new hegemony. And it will happenexactly as the (capitalist) state wants as long as it does not meet with intel-lectual and social resistance which will transcend the social and intellectualbalance of power.

The World Social Forum and our seminar here constitutes a strong vi-

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For the Keynesianism that was part of the post-war model did not merelyconsist of a set of economic techniques to deal with recession and aggregatedemand. It represented at the same time a broad, and relatively coherent,patchwork of political, social, and economic elements. This patchwork in-cluded certain relationships between the fundamental economic aggregates(for instance between profits and wages, or investment and consumption),social norms regarding the level of acceptable inequality (the wage levels atboth ends of the income distribution, care for those unable to work or for theunemployed, and so on), and arrangements that in various ways institution-alised the voice of important social groups and which could to some extent“correct” market outcomes by political means. To be sure, there was neverone economic model for all the advanced capitalist economies in the post-war era, but nearly all had some of these elements to a greater or lesser ex-tent. The contradictions of social democracy, and of the political centre, atthe present time reflect the fact that social democrats have no conception ofwhat is to replace the neoliberal model of the last twenty years. And howcould it be otherwise when they have for so long operated under the hege-mony of these same neoliberal ideas?

So it is obviously crucial to understand the failure of the neoliberal modelif we are to transcend it. Only in this way can one formulate a response to thecrisis which is, at the same time, linked to some conception of a viable eco-nomic model for the longer term. In most left conceptions neoliberalism hadtwo main goals1. The first was the restoration of class power. This power, itwas argued, had been severely restricted by those elements of the previoussettlement described above – “political” corrections to market outcomes, na-tionalisations and state intervention, the strength of the trade-union move-ment, and so on. The second was to prepare the ground for a renewed peri-od of expanded capital accumulation, a new “golden age”, but this time oncapital’s terms. And, obviously, in neoliberal accounts the first goal was a pre-requisite for the success of the second; for, it was further argued, it was exact-ly certain elements of the Keynesian model which had stifled the dynamismof markets and entrepreneurship.

From this perspective, the crucial question with respect to the failure of theneoliberal project can be posed more concretely. How is it that neoliberalismfailed with respect to its second goal when it was so successful with respect tothe first? The success of the first can hardly be questioned. The decline of thereal value of the minimum wage, the severe contraction of the unionisationrate and the movement to economic deregulation are merely three of the in-stitutional transformations that have underpinned the restoration of theclass power of capital2. Moreover, such transformations have a clear expres-sion in the huge increases in the inequality of income and wealth that have

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Since the outbreak of the economic crisis most policy makers, as well as an-alysts, have been “behind the curve”; that is to say, they have consistently

underestimated the seriousness of the economic crisis and therefore also theradical nature of the necessary response.

Setting the question

In the first instance, with the Brown Plan for the banks and Obama’s prom-ise of a dynamic response upon his assuming the office of president, itseemed that the political centre would be better placed for such a responsethan their opponents to the right. However, important contradictions andambiguities soon emerged: how much of the banking system should be tak-en over by the state, and should this new role of the state be seen as tempo-rary or part of a longer-term solution? Does the Stability Pact in Europe needa more flexible interpretation or a respectful, but nonetheless, firm commit-ment to bury it? Social democrats have not found such questions easy to dealwith. And the reason is not that they are unable to see some of the necessaryresponses to the economic crisis in terms of state intervention, or regulation,and a more dynamic macro-economic strategy. It is that this partial return toKeynes is not linked to any clear conception of a wider strategy, of the kindof economic model that needs to replace neoliberalism once the crisis hasbeen dealt with.

Radicalising the Agenda: the Left’s Response to the Crisis

Euclid Tsakalotos

Robert Brenner, whose account of the 1970s crisis does not rest on highwages and profit squeeze, but on the struggle between capitals, sees that cer-tain economies have been able at times to gain the upper hand in the post-1974 period to the degree that they were able to rein in wages5. But it couldbe that a restoration of capital accumulation would need to rely on a morewholesale devalorisation – destruction – of capital. The effect of World WarII after the Great Depression could be adduced as evidence supporting thiscontention.

But there is another possibility, not necessarily in contradiction with otherexplanations. It may be that the neoliberal project was fundamentally at oddswith the requirements of modern complex economies. One is reminded ofMarx’s prediction in Capital, and elsewhere, with respect to the increasingsocialisation of capital. But the argument I want to make here can be present-ed in terms of both orthodox economics and much more heterodox ap-proaches. Thus, with respect to the former, Barry Eichengreen6 has arguedthat the post-war economy’s success was in part based on finding solutionsto the various coordination problems faced by a market economy. The detailsof the institutional solutions that were furthered are less important– theywere in any case different in the various economies of advanced capitalism,reflecting different historical experiences as well as different configurationsof class power – than is the fact that they furthered the dissemination of in-formation, enhanced trust and promoted cooperation. One can gain a simi-lar perspective from Karl Polanyi’s “double movement” which challenged theviability, let alone the efficiency, of any radical liberalisation of the economyand marketisation of most of society’s functions.

But a similar case can be made within a more radical problematic. It is im-plicit in much Marxist theorising about the increased socialisation of pro-duction even within capitalism. Moreover, one can see a similar case beingmade, implicitly at least, by those social movements that have been challeng-ing neoliberal gloabalisation. In Polanyi’s schema any radical departure in thedirection of liberalisation would sooner or later be countered be an institu-tional reaction in the direction of re-regulation as the negative consequencesof liberalisation, in terms of its effects on people, communities and the envi-ronment, became apparent. What social movements add to this perspectiveis that the counter-movement need not necessarily come from institutionsfrom above– it can just as easily come in the guise of social interventionsfrom below.

The sway of neoliberal ideas, and the loss of historical memory concerningthe role of social movements in the formative years of social democracy,makes it difficult for many social democrats to grasp such a conception. Alltoo often social movements are dismissed, or their importance is under-

been observed in the more liberal economies3. No advanced economy hasseen quite the stagnation of real wages occurring in US since the early 1970s,but in most economies wages have not kept up with productivity increasesand the share of wages in national income has declined.

So we need to understand this paradox – the failure of neoliberalism de-spite the “success” of its project in terms of political economy. And as we shallsee, unravelling this project will help us to understand not only the dilemmasthat social democracy faces, but also the basis for a response from the left thatcan aspire to hegemonic status.

Understanding the failure of neoliberalism

There is room to debate the extent to which the neoliberal episode was afailure. Some would argue that what we are observing is a failed response toa crisis of accumulation that emerged starting in the late 1960s. In otherwords neoliberalism was never able to deliver the goods in terms of a returnto a period of expanded capital accumulation. Others are more upbeat aboutneoliberalism’s overall track record, arguing that capitalism has indeed wit-nessed over the last few years a dynamic period, which is evident if we exam-ine economic data from the early 1980s onwards. Others still, consider theperiod as neither one of continuing crisis, nor one of dynamism, but of rel-ative stagnation4. But however that may be, it is clear that the neoliberalepisode has ended with a major crisis which may as yet resemble that of theinter-war period, and so we are entitled to ask why this should be the caseeven though, as we have argued, so much of the neoliberals’attempt at restor-ing class power was successful.

Now, we are certainly unlikely to discover a one-dimensional cause of thecrisis. For instance, one argument could be that the extent of the left’s defeat,both in terms of political representation and at the level of social movements,has been exaggerated. For instance the level of resistance since 2000, and es-pecially in the South, has caught many by surprise. Moreover, neoliberalsthemselves have been arguing that the necessary “reforms”, especially inlabour markets, have not occurred thoroughly or quickly enough, especiallyin Europe. But this argument ignores the fact that the present crisis originat-ed, and until now is more serious in its consequences, in the more liberaleconomies– that is, in those economies that have undoubtedly been moresuccessful in driving forward the whole neoliberal agenda. Another argumentmay point out that neoliberals may have displayed misplaced confidence inthe ability of low(er) wages, and flexible labour markets, to deliver improvedeconomic performance. Marxists too are prone to the belief that lower wagescan be an important response for the revitalisation of capitalism. So even

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and distribution. On the whole, the capitalist economy does not select eco-nomic practices on the basis of economic efficiency. Capital is interested, inthe first instance, in those solutions that enhance profits on existing activitiesand that expand the scope for profit to new activities. It is also concerned thatits managerial and other control prerogatives not be challenged. Thus, as ErikOlin Wright8 has recently argued, capitalists will rationally oppose the in-creased social embeddedness of the economy even if this would enhancegeneral economic performance. This is because such embeddedness has thetendency to increase the power of workers and other social groups, as well asthe attractiveness of collective solutions.

It further follows that conflict and struggle are unavoidable components ofany resolution to the crisis. The left and right fight each other over long his-torical periods, but it is important to realise that the information made avail-able in any one period is subject to important changes. Thus capital is unlike-ly easily to acquiesce to any return to the social democratic model of thepost-war period, precisely because it has learned of the dangers of such a set-tlement. In the 1970s capital could not but look in horror at the turn of theLabour Party in Britain to the left, at the creation of the common programmein France, or at the support of Swedish social democrats for the wage-earn-ers scheme for the socialisation of capital. In the current conjecture it hasevery reason to oppose Polanyi’s counter-movement even if it makes somesense on economic grounds.

And this is precisely the dilemma faced by modern social democracy. So-cial democrats are unable to have a clear vision of a viable future model be-cause it is not at all clear that capital would acquiesce to any such model. Andthis affects the efficacy of social democratic responses to the crisis even in theshort-run. How much of the financial system needs to come under state con-trol, and should the state’s role be seen as a temporary measure or part of amore permanent feature of the economic model after the crisis has been re-solved? Do we need a radical reorientation of financial activities or can finan-cial institutions be allowed to decide their priorities for themselves albeitwith a little tighter level of supervision and regulation? Social democrats dis-play hesitation and ambiguity with respect to such questions because short-term proposals are not linked to longer-term solutions. Thus, for instance,there has been little thought given to the question of where the dynamism ofthe economy is to come from – if not consumption through lending, whatwill take its place?

What social democracy cannot at present accept is that any new model willrepresent a political economy settlement with clear winners and losers. Anynew settlement needs not just to be implemented, but in some sense im-posed. Social democracy has forgotten that the post-war settlement was also

played, because their role is reduced to protest or blind opposition. But in theformative years of social democracy, social democrats of all stripes wereaware that the working class represented not merely a protest movement butthe bearer of new ideas and practices which encompassed essential elementsof the left’s alternative proposal for the economy and society. The values ofsolidarity, participation and deliberation forged in the struggle of workerswithin their union were seen as vital not only in the opposition to capitalismbut as essential elements in a feasible alternative economic model. The samegoes for the social movements of the present. Thus, for instance, a socialmovement that struggles for free spaces in urban centres is not just aboutstopping private constructors from privatising the commons. Implicitly orexplicitly, it is proposing new practices for the identification of the socialneeds of city dwellers, as well as other practices for managing public spaces.One could expand such examples, almost at will: unions that want to runtheir pension funds, communities that want a greater say with respect to theirschools, regions that want to have continued access to free water supplies,and so on. In all these cases practices are being proposed that to a greater orlesser extent seek to challenge market solutions.

The argument that the left needs to make is that such challenges are notonly attractive from a social or ethical point of view, but constitute a realisticalternative path for improved economic performance. Modern complexeconomies need a great deal of solidarity, coordination and participation,and the essential thrust of capitalism, not only in its neoliberal guise, is hos-tile to all three. At least part of the current crisis results from ignoring theseneeds, most obviously with respect to the financial system where the settingfree of market values and principles has wrecked havoc, but in many otherareas as well7. It is for this reason that left has an important advantage in thepresent conjuncture with respect to social democracy. It can propose imme-diate measures to respond to the crisis which, at the same time, are linked toan overall image of the type of economic model that is desirable for thelonger term; an economic model that can be based on specifically left valuesand practices.

Political economy and economic models

If the left in all its manifestations (parties, unions, social movements, etc.)is indeed the bearer of economic solutions that can combine efficiency andequity, certain things follow.

The first is that ceteris paribus capital has a rational interest in opposingthe social embeddedness of the economy, especially if this is to be achievedwith social institutions that embody non-market principles of production

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in the Gramscian mode. In the hey-day of her dominance, Thatcherism re-established the link between values and policies in the UK’s public life, madeideas (and ideology) central to political leadership, and required of its sup-porters, not only that they believe its central tenets, but that they lived andapplied them to the full. Like all successful political forces in democratic so-cieties, Thatcherism took many of the central values and aspirations held byus all (values of liberty and individual rights, aspirations for prosperity andprogress), tied them to a series of operating principles (in her case, over-whelmingly the principle of the unfettered market), and then steadily, res-olutely and with great self-confidence, applied that operating principle, in thepursuit of those values and aspirations, to policy area after policy area.“

The left, with important exceptions of course, needs to aspire to a similarhegemonic project. In any crisis what is at stake is which ideas will give themost coherent explanation of the crisis. Neoliberals, and the New Right, wereable dominate with respect to interpretations of the 1970s crisis: at fault wasstate intervention, powerful trade unions, the welfare state that blunted mar-ket incentives, and so on. In the present crisis, similar contentions can be eas-ily ridiculed. On the contrary, with social democracy still under the sway ofthe previous consensus, the left has an ideal opportunity to retake the ideo-logical high ground with respect to the interpretation the crisis.

The case made here is that the left has the ideas to achieve this. The lefthowever has one additional advantage over its ideological rivals. It relies notonly on the theoretical work of leftists but also, as has been argued here, onthe fact that social movements are themselves bearer of new ideas and prac-tices. Social movements, including that of the working class, have understoodthat they need to contribute to a radical transformation of power relations ifalternatives to neoliberalism are to see the light of day. But in the very processof challenging the power of capital, social movements bring to the surfacedifferent approaches to production and distribution, approaches that com-bine efficiency and equity.

Radicalising the agenda entails restoring the links between what the leftproposes in the short-run and its more medium-term conception of an alter-native model for the economy. And it has been argued here that forging suchlinks is extremely difficult for the forces of social democracy to achieve. Thus,instead of intervening in the public policy debate over what to do with re-spect to the crisis by attempting to shift the proposals of social democracyslightly to the left, what is needed is the self-confidence to propose radical so-lutions which are inspired by our distinct values, aspirations and operatingprinciples. Such an approach can form the basis for a hegemonic politics forthe left for the first time in many generations.

based on important elements of imposition – capital feared the working classmovement, the respect gained by many left-wing parties during the resist-ance, and not least the ability of the Soviet Union to act as an alternativepole9. The idea that a new settlement could be imposed without similarstruggles and a shift in the balance of class forces is not supported by any his-torical evidence, not to mention theoretical logic. And yet social democracyhas all but renounced social mobilisation as an instrument for changing thebalance of power in society. In this area as well, the left has the advantageover social democracy. It understands well that any alternative economicmodel will result from a significant shift in the current constellations of so-cial power.

Radicalising the agenda

This is the context in which the left needs to radicalise the agenda. It is easyto forget that the attack on the post-war social-democratic arrangements be-gan with a serious ideological examination of the right’s traditional valuesand ideas. As G. A. Cohen11 has pointed out:

„An essential ingredient in the Right’s breakthrough was an intellectualself-confidence that was grounded in fundamental theoretical work by aca-demics such as Milton Friedman, Friedrich Hayek and Robert Nozick. In oneinstructive sense, those authors did not propose new ideas. Instead, they ex-plored, developed, and forthrightly reaffirmed the Right’s traditional princi-ples … Considered as practical proposals, the theories of Friedman, Hayekand Nozick were crazy, crazy in the strict sense that you would have to becrazy to think that such proposals (e.g. abolition of all regulation of profes-sional standards and of safety at work, abolition of state money, abolition ofall welfare provision) might be implemented in the near, medium, or longterm. The theories are in that sense crazy precisely because they are uncom-promisingly fundamental: they were not devised with one eye on electoralpossibility. And, just for that reason, their serviceability in electoral and oth-er political contexts is very great. Politicians and activists can press not-so-crazy-right-wing proposals with conviction because they have the strength ofconviction that depends on depth of conviction, and depth comes from the-ory that is too fundamental to be practicable in a direct sense.“

The relationship between values, operational principles and agenda-settinghas ironically, up until recently, been better understood by the right of thepolitical spectrum. David Coates12 has put this political project of the NewRight in more concrete political terms with respect to the British experience:

„For whatever else Margaret Thatcher was, she was genuinely a politician

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Notes1) See, for example, Harvey, David (2007): A Brief History of Neoliberalism. Oxford Uni-versity Press. Glyn, Andrew (2006): Capitalism Unleashed: Finance, Globalisation, and Wel-fare. Oxford University Press.2) See Fortin, N.M. / Lemieux, T. (1997): Institutional Changes and Rising Wage Inequality:is there a linkage?, Journal of Economic Perspectives, 11, 2, pp. 75-96 for the role of these fac-tors in the US.3) An early account of the reversal of the post-war trend towards greater equality can befound in: Harrison, Bennett / Bluestone, Barry (1988): The Great U-turn: Corporate Re-structuring and the Polarization of America. New York, Basic Books.More recent accounts detailing the phenomenon can be found in: Green, F. / Henley, A. /Tsakalotos, E. (1994): Income Inequality in Corporatist and Liberal Economies: a compari-son of trends within OECD countries. International Review of Applied Economics, 8, 3, pp.303-331. Atkinson, A. B. (1997): Bringing Income Distribution in From the Cold. EconomicJournal, 107, pp. 297-321. Piketty, T. / Saez, E. (2003): Income Inequality in the UnitedStates, 1913-199’, Quarterly Journal of Economics, 68, 1, pp. 1-37.4) A lot turns on how one deals empirically with the 1970s. If one takes the whole post-1974 period as one entity then the figures do not look so good in terms of economic per-formance (compared with the “golden age”). If the period 1974-1982 is excluded thenthings look a lot better.5) Anderson, Perry (2005): Spectrum: From Right to Left in the World of Ideas. VersoBooks, who provides overall a positive assessment of Brenner’s contribution to our under-standing of the post-1974 economic order, also points to certain ambiguities with respectto the role of wages as either a cause of crises or as an essential part of the recovery fromcrises.6) See Eichengreen, Barry (1996): Institutions and economic growth: Europe after WorldWar II. In: Crafts, N. / Toniolo, G. (eds.): Economic Growth in Europe since 1945, CEPR,Cambridge University Press, chapter 2.7) One need think only of the irrationalities that have followed rail denationalisation in theUK.8) Wright, Erik Olin (2004): Beneficial Constraints: Beneficial for Whom?, Socio-EconomicReview 2, 3, pp. 407-414.9) Brenner, Robert (2007): Structure vs Conjuncture, New Left Review 43 second series, pp.33-59 has argued that such considerations hold even in the case of the US.10) As Frank, Thomas (2004): Bush, the working class hero, The New Statesman, 30 Augustargues for the US case, the Democrats have abandoned any conflict with their Republicanrivals over the terrain of economic policy, and with issues of low wages, inequality, and soon, conveniently taken off the agenda, the Republicans have been able to mobilise the De-mocrats’ social base on a variety of cultural issues. The ability of the right in Europe tomobilise on the terrain of nationalism and anti-immigration could be seen in similarterms.11) Cohen, G. A. (1994): Back to Socialist Basics, New Left Review 207, emphasis in theoriginal.12) Coates, David (1996): Labour Governments: old constraints and new parameters, NewLeft Review 219, emphasis in the original.

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A New Phase of Neoliberalism:

Collapse and Consequences

for Sweden

Daniel Ankarloo, Patrik Vulkan

out. First, the interest rate in the US was so low that it created a credit bub-ble. It became so inexpensive to borrow money that people then did so on alarge scale. Second, certain laws and regulations forced the banks to lendmoney to low-income earners who did not have the means to pay back.There is some truth in these statements, but they fail to acknowledge the factthat capitalists and banks themselves have not been uninterested in lendingmoney. On the contrary, they have made money in so doing.

According to basic national economic theory you can say that a low inter-est rate sharply raises the demand for loans, but lowers the supply of loans.In other words, the banks ought to be less inclined to grant loans when theinterest rate is low. Instead, the banks have been very aggressive in their ef-forts to lend money. The reason is that in a bubble it is rational to speculatein a rise of real estate prices, because that is how banks make their profitswhen lending money. So, we have a credit and financial crisis that is nowspreading through the whole economic system since the capitalist system de-pends on credit.

Some people wish instead to have a system and an economy free of inter-est, but they don’t grasp how the capitalist economy functions. A capitalisteconomy without a credit system will not work.

Vulkan: Is what’s happening now also a crisis of the system as such for cap-italism?

Ankarloo: It depends what you mean. In a Marxist sense, the crisis is part ofthe system, but what is happening right now, when you temporarily try tosolve the antagonisms of the crisis, is also part of how the system will recov-er. The lack of credits is now causing problems for the financial system as awhole, and the capitalist system is passing the crisis on to the working class,with unemployment and reduced wages as a consequence.

However, the crisis also means a purging of the capitalist system. The pre-vious speculative values will be cleared away, and so the ground for a new ac-cumulative cycle is prepared. It is a capitalist crisis but I don’t think it’s a cri-sis for capitalism that threatens the system as such. The crisis is an adjust-ment of speculative values in relation to real values.

Vulkan: Did the crisis come as a surprise?Ankarloo: No, I don’t think it came as a surprise for anyone, really. The only

people who are surprised each time are the economists, because crises suchas this one don’t exist in their models and equations unless someone, let’s saythe state, ”distorts” the market. There are still some right-wing economistswho are trying to say that this crisis doesn’t prove that the market is notworking, and that the regulating governments are to blame. But hardly any-

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Daniel Ankarloo, senior lecturer in social studies and economic history atMalmö College of Higher Learning, speaks with Patrik Vulkan about the

increasingly profound financial crisis, the historic parallells to the currentcrises and possible political strategies for the left and the labour movementin Sweden.

Patrik Vulkan: What is the background to the current crisis?Daniel Ankarloo: There are a number of coinciding factors, but basically this

is a credit crisis. A credit bubble, or loan bubble, has been caused by specula-tions in future increases in value, primarily of real estate properties. Loanshave been granted based on an assumed future increase in value, and, in theend, the value of the loans has become much higher than the value of theproduction in the real economy underlying these loans. Iceland is a typicalexample, where the value of the banks has been several times higher than thevalue of the country’s GNP.

The crisis is therefore merely an adjustment of the actual value of re-sources, such as real estate. The value of real estate is falling dramatically, andas a result those who have granted the credits, the banks in other words, arenot getting their money back. Because of these credit losses, the banks nolonger grant any loans, neither to private clients nor to other banks, and con-sequently the whole credit system has come to a halt, primarily in the US.

There are other factors that especially neoliberals will not hesitate to point

A New Phase of Neoliberalism: Collapse and Consequences for Sweden

Daniel Ankarloo, Patrik Vulkan

tions around the world, with the Swedish crown growing weaker and the dol-lar growing stronger. That is a historical parallel to the crisis in the 1990s forexample. But there are certain things about the present crisis that are inter-esting, and different, and which actually worry me a bit. It’s a fact that dur-ing the crisis of the 1930s the US was a net lender in the world economy. Thisis no longer the case. A lot of the world’s external debts are placed in the UStoday and they will now take on new huge debts. This is the only country thatcan do this, not because it’s a financial superpower, but because it’s a militarysuperpower. The only way for the US to compensate for these massive exter-nal debts is to simply say no to any other country that would claim its mon-ey back, and back this “no” up with military means. So, I’m a bit worried thatthere will be a growing militarisation of the US administration and foreignpolicy. On top of that, there is another problem in that the financial sectortoday is infinitely bigger than it was back in the 1930s.

If you look at Sweden it’s interesting because the parallells are a bit differ-ent here. This is really a global version of the crisis that Sweden experiencedin the 1990s. There are similarities: The Swedish tax, loan and interest systemmade it attractive to borrow money prior to the crisis of the 1990s, and youcould basically do so for free. The difference is that today the Swedish bankshaven’t been lending in the same way and they are still making big profits. Ontop of that, Sweden has a gigantic surplus both in the trade balance and,above all, in public savings. It’s both interesting and bizarre that our ministerof finance says that we can relax because Sweden has such a surplus of pub-lic savings that we are well equipped to meet the crisis. This is interesting be-cause neoliberals have spent the last twenty years telling us about our largedeficit in public savings and the need to do something about it.

So, there are parallells but differences, too. If you look at the US-Americansituation, the difference is that they start with a very big debt, both an exter-nal and a national debt, which they didn’t have in the 1930s. Sweden is alsoin a somewhat different situation because we have a large positive trade bal-ance and big public net assets, which we didn’t have in the 1990s. The sur-pluses will now diminish somewhat, possibly in the pension system, but themargins are still sufficient to avoid a major budget deficit. What will hit Swe-den though is massive unemployment, which we are seeing right now, andthe historical parallel is obvious: this is exactly what we saw in the 1930s and1990s.

Vulkan: This leads us to the following question: How will this affect Swedishcapital and the Swedish working class?

Ankarloo: What’s serious is how it will affect the Swedish working class. Ifyou look at the crisis as a way to temporarily and fairly quickly readjust the

one listens them anymore. If you look back, there were in fact financial ana-lysts and economists who pointed out that the American system would notbe able to keep on lending so much money to so many people, people whocould not be expected to have the means to pay those loans back.

You should also remember that the US as a nation has both a gigantic for-eign and domestic debt, and this situation is starting to look more and morealarming. No other country would have been able to accumulate such debtsto the rest of the world. Therefore it’s not surprising that such a bubble wouldburst, even if it was hard to predict the exact moment for it to happen.

Vulkan: How should one look at the role played by the media? Until just re-cently an almost unanimous corps of financial journalists described the eco-nomic system as stable.

Ankarloo: This is an example of what I would call a market myth. There hasalways existed a general tale about the financial markets, loans and savings inshares claiming that these systems are sound and that it is safe to invest yourmoney in shares to mortgage your house. Within the existing theoreticalframework, this has always been a reasonable starting point, and once a bub-ble like this one starts to grow it’s very important to start speculating early onin the process if you want to make profits. So the system is rational, albeit ina perverse way, which a lot of right-wing debaters forget afterwards. And,there are always those who joined too late, the ones who borrowed money onoverrated real estate values and who now see their values drop dramatically.These are the big losers.

But media, the financial journalists, are not the determining factor here,even though they haven’t done their job properly. Media have always claimedthat the credit- and loaning system is ”robust”, at least in the long run. Theyhaven’t been the ones sounding the alarm. They have not pointed out thatthis could not go on, on the contrary. But I’m not sure it’s the journalists whohave had an effect on the investment decisions or had an impact on the de-cisions to grant these loans. For the poor in the US it has all really been abouthaving a place to live, and for more active investors and speculators it hasbeen a way of making money. And so they have, which a lot of people are nowforgetting .

Vulkan: Can you see any historical parallells to what is happening rightnow?

Ankarloo: Well, there are similarities as well as differences. There are histor-ical parallells in the sense that this is a classic crisis of speculation wherebanks are suffering huge credit losses, which in turn will cause the economicsystem as a whole to come to a halt. We’ve also seen major currency fluctua-

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interesting that everyone is talking about the crisis and how the state has be-come so necessary, but no one says that we could actually re-socialise theschool system – or re-employ people in the public sector, for example.

So, capital has a strategy for regulating what needs to be regulated at thesame time as those sectors that have already been deregulated and privatisedare left intact. They’re simply trying to protect the neoliberalisation that hasalready taken place.

Vulkan: Is it also possible to see what capital’s possibilities and strategies arein the long run, or how capital intends to take advantage of the situation?

Ankarloo: Yes, both. What capital is doing right now is really only some-thing that is shortsighted that will have long-term consequences. They are in-terested in – and this is the tragedy – what the whole political system is inter-ested in: saving the system. There is a lot of left wing rhetoric about how weare now trying to save the rich at the expense of the poor, or saving profitsfor the banks. I think it runs deeper than this. What they are trying to achieveis to save the system as such, because the free market and the market system,i.e. capitalism needs to be saved from itself on a regular basis. That is themain historical parallel to the 1930s and postwar politics.

There are some advantages for the working class in those politics, but onemust not forget that the whole purpose of postwar policy was to save the sys-tem from itself. Capital, and capitalism as a system, entered a long era of ex-pansion until the 1970s. Capitalism won’t enter a similar era of expansion af-ter this crisis. I don’t think that is what worries capital, though. The questionis rather: How can we save the working of the system as such? That’s why theypromote the idea of “the state having to save the credit systems”. Capital’smain long-term strategy is still to increase the power of capital relative to theworking class in the overall class struggle, and for a long time they have beenvery successful. What might worry capital is whether the crisis will turn intoa criticism of the system itself or shift the balance of forces within the classstruggle. That’s why they don’t mind getting the state involved, althoughsome debaters worry about, and by all means want to avoid, socialism reap-pearing on the agenda and the working class raising radical demands on thesystem level. Unfortunately, they don’t have to be particularly worried aboutthis for the time being.

Vulkan: It would be interesting to look at the opportunities for, and strate-gies of, the working class and the left.

Ankarloo: It’s a question of potential. What would the working class be ableto do? What’s the strategy? The problem is that the Swedish labour move-ment has become extremely weakened by twenty to twenty-five years of class

system to a new wave of accumulation and killing of dead capital, i.e. hypedvalues, then the working class will always be the class that bears the cost interms of increased unemployment and a subsequent cut of wages, just like inthe 1990s. So, although from a labour market point of view the crisis of the1990s has never ended, there will be a new crisis which is going to be as seri-ous as the latest one, and perhaps even worse in terms of unemployment. Itwill hit hard and create mass unemployment for the Swedish working class.

The question is how this will affect Swedish capital in general. Swedishcompanies have been showing declining profits as globalisation has madethem more dependent on the results of speculation and less on the results oftheir actual production. Annual reports show major fluctuations in the earn-ings of large companies. The values on the stock market and speculative val-ues are going down, while the values from the companies’ actual operationshave not yet been affected as much. However, the situation differs a great dealbetween different companies. It’s quite possible that we will see an increasedconcentration of capital in Sweden after this crisis, which is a general predic-tion that one can make based on Marxist theory.

Following a crisis, large capital emerges stronger than small capital. I’vealso heard and seen indications from some writers that large capital like theWallenberg trust will sit still and wait to buy cheap shares and cheap compa-nies when values go down, which would lead to a further concentration ofpower.

What Swedish capital is doing right now is of course trying to pass on asmuch of the cost of the crisis as possible to the working class and the taxpay-ers. This is what all the bailouts are about: to save capital and transfer thecosts to the working class. This is classic and has clear historical parallells.What you could say, at an ideological level, which may be more important tous, is that capitalism and capital are entering a new phase. I call it a new phaseof neoliberalism. I’m not claiming that neoliberalism as such is dead. The ne-oliberal ideological arguments in favour of capitalism are now being aban-doned by capital itself, because they are becoming irrelevant. The idea thatthe free market adjusts itself is irrelevant to Swedish capital and to capital atlarge, as they now want the state to act in order to protect them. So, I thinkwe will see different arguments and rhetoric from capital than we did in the1980s and 1990s. Neoliberalism is entering a phase in which it turns to thestate to salvage what it can from earlier privatisation. Not a lot of peoplethink of this as left wing, and primarily the liberal left claims that it is nowbecoming evident that the state is necessary for capital and that capital is be-coming aware of this. That is quite possible, but what capital is saying is thatthe state should regulate the banking systems; they are not saying that weshould bring what has already been privatised back into the public sector. It’s

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without pay” either, not in unemployment benefits nor in the health insur-ance system. These are really just classic strategic demands to improve theposition of the working class – and they should be put forward immediately.

The working class has an opportunity today, which is not brought about bythe crisis itself, although the crisis will force the labour movement to becomemore radical and to raise these demands. What worries me is the fact that theleading cadres of the Swedish labour movement, the ones who should standup for this, the union and the political leaders, are not thinking in these termsat all.

The radicalisation must therefore come from below in the form of the self-organisation of the labour movement. I still believe that the labour move-ment needs political parties and some form of political organisation, but aslong as that leadership is not in place, this can only come from within the LO-collective itself. In some parts of the LO-unions, primarily at the local levelsof, say, Transport, the wood industry, SEKO and so forth, there are signs ofsuch ideas spreading.

Another aspect, which a politically conscious labour movement shouldpush more strongly, is raising demands on the welfare sector, and for two rea-sons: firstly, because the welfare sector is beneficial to the working class bothas consumers and producers, and unemployment would decrease in a con-structive way if the public sector was to reemploy those who are laid off. Sec-ondly, because the public sector is relatively immune from the kind of wavesof speculation which are now affecting the private sector, and it is not de-pendent on exports.

The political sector could act in more innovative ways. The political leftcould put pressure on the state to reinstate protection in the social securitysystem for the part of the working class that will be affected. They could alsoact in a more productive manner and carry out carefully prepared pro-grammes to enable jobs that are lost in the private sector to be replaced by e-jobs within the public sector.

At the moment, few people are raising these demands, or have the courageto do so, but the labour movement has to start making these demands andmuch more vigorously than ever before. You have to get down to actual de-mands and start counting: How many workers at Volvo will become redun-dant? For how many should we demand severance pay? How can we organ-ise a shift of those who want to and have the ability to be moved from unem-ployment and being a part of the industrial reserve army in the private sec-tor, to the public sector and its production? You simply have to start thinkingin terms of use-value instead of value terms.

Hopefully, in the long run, this crisis will serve as a wake-up call to get peo-ple to reject the current class cooperation, something that will open people’s

cooperation, and hasn’t really worked out an alternative or programme bywhich to counter the crisis. Funnily enough, the Swedish left and labourmovement, the official labour movement in LO (the Swedish Trade UnionConfederation) and SAP (the Swedish Social-Democratic Party), reacts withthe same perspective as capital: How can we save the system from disaster?This is because the left, and the social democrats, realise that if the credit sys-tem collapses, the consequences will be much worse than if it doesn’t. Theytherefore see themselves compelled to support the bailouts. What you couldsay separates the left from the right, is that although they both moralise overthe system, there are those who moralise over individual capitalists and callthem greedy, while some, who may have a slightly better understanding ofthe situation on the left, say: “There you have it, the free market doesn’twork.”

Now, if the situation is that critical for the working class, it still doesn’t nec-essarily mean: ”Okay, capital is going to hell, let’s take over Volvo.” Since so-cialism is not perceived as an immediate alternative at the moment, people inthe labour movement and on the left must find strategies to deal with thiscrisis that make us stronger and better prepared for the class struggle that liesahead. We must find a strategy that will make socialism appear as a possibil-ity after this crisis. The crisis will be given a capitalist solution; it’s the onlyway it will be solved in the short term, within the next two or three years. Thestock markets will eventually rise again. And if the working class is going tobear the brunt of this, which it probably will, we must have an immediateprogramme ready to ease that burden. So, what can the movement do?

If we look at things as they are right now in Gothenburg, Volvo is givingnotice and laying off people which makes it necessary to put a programme inplace about ”What will we do with the people becoming unemployed?” Let’slook at the differences between the reactions in Gothenburg and in Umeå. InUmeå they raised demands that everyone above sixty should receive sever-ance pay until they reach the age of 65, which will cover their retirement. It’sa concrete demand: People will lose their jobs but in this way you make surethat the burden of unemployment stays low. I have suggested that everyonewho is forced into unemployment should immediately be moved to retrain-ing programmes. That’s how we put forward real demands. If indeed thepublic sector has such a large surplus then it should be put to use in an inno-vative and productive way. That is to say, the public sector should employ thepeople that Volvo is laying off.

Those are the kinds of real demands that should be made, including unem-ployment benefits of at least 90 %. The way LO is negotiating with SAP – “wewant 80 %” – is just nonsense. We should get 90 %, the excess for the work-ing class should be close to zero in this crisis. There should not be any “days

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eyes to the limits of class cooperation, or simply the death of class coopera-tion as far as the Swedish working class goes. We’re not there yet, since all theleft and the labour movement is presently doing is turning to class coopera-tion. I hope and believe that this crisis can induce parts of the labour move-ment actually to become more radical and wake up to the fact that the onlyclass cooperation that exists is on “their” terms, not ours. We have nothing togain from this.

This is what is really at hand right now. A socialist strategy in Sweden hasto emerge by way of a growing class mobilisation. It can only happen throughour everyday struggles, and the everyday struggles we can win at the momentare those that are fought to provide care centres, other social services and asocial-security system. The owners of Volvo aren’t particularly worried thatwe will take over their factories, as long as we can’t even save the care centresthat we have.

We need to develop strategies for offensive welfare politics and offensivelabour-market politics, and the result we can hope to achieve is not to solvethe capitalist crisis, but to emerge from this crisis in a much stronger posi-tion.

Vulkan: Thank you for the interview.

Translation into English: Emelie Cañadas

This text was previously published in the Gnistan. Swedish Journal of International Socialists, No. 29/2008 and in Socialist Debate, No. 4/2008.

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Capitalism and Crisis in Denmark

Anders Lundkvist

Financial capital is organised in financial corporations (especially banks,real estate and insurance) and funds (pension funds, mutual funds, privateequity funds, hedge funds etc.). Through a number of mergers Danske Bankhas acquired 50 % of all banking business and, with its interests in real estate,insurance and pensions, at least 40 % of the whole financial sector. I know ofno other capitalist country, where finance capital is concentrated to such ahigh degree, but in Denmark no one seems to be worried by it, least of all theauthority that is supposed to supervise the sector (‘Finanstilsynet’), which –like the EU authorities, by the way – approves of almost all mergers and ac-quisitions. The interests of big capital seem to weigh heavier than considera-tions of competition.

A. P. Møller-Mærsk owns 22.23 % of the shares of Danske Bank – thus theNo.1 of productive capital controls the No. 1 of financial capital, a relationwhich is confirmed by numerous cases where chief executives move from theone corporation to the other. Thus, we have an enormous concentration ofpower at the very top of Danish capitalism, though no one seems to notice.

The increased concentration of capital power is confirmed when we widenthe scope. In 1980 the ten largest corporations had sales which were equal to20 % of GNP; in 2006 this figure had increased to 50 %, now – not surpris-ingly – with A. P. Møller-Mærsk and Danske Bank as, respectively, No. 1 andNo. 2 (actually, they ought to count as one company).

The Danish pattern of increased concentration of capital, thus increasedpower to capital, can also be observed on the global level. In 2001 multina-tional corporations controlled 67 % of world trade, measured by export, mak-ing so-called “free trade” tantamount to freedom for the multinational corpo-rations and reduction of tariffs tantamount to reducing a fee on these compa-nies. There seems to be a certain discrepancy between the abstract discussionof “free trade”, preferred by the liberals, and the more sordid realities. The per-centage was ca. 59 % in 1990, so there is no doubt about the trend, namely thatliberalisation unsurprisingly has given more power to big capital.

If we look at the separate branches of the Danish economy, the same pat-tern of increased concentration emerges; competition seems to give way tooligopoly (few sellers).

This goes for the primary sector (oil from the North Sea – controlled by A.P. Møller-Mærsk – as well as agriculture), and the secondary sector, where thethree biggest companies within the different industrial sub-branches have onaverage increased their market share by more than 2 % in five years, from1999 to 2004.

Looking at the tertiary sector (services), concentration has especially in-creased within finance (as mentioned above) and retail. In a typical process,retail has been transformed from a competitive market into oligopoly, be-

Anders Lundkvist analyses the financial crisis in Denmark and showsthrough a discussion of capitalism and democracy that democratic or-

ganisation of the economy can hardly be less efficient than the crisis-ridden,anti-competitive rule of capital.

Modern Danish capitalism

Capital is divided into productive capital which produces something,whether commodities or services, and financial capital which transfers thesavings of business and households to productive investments that can givean income in the future, e.g. pensions. That, in any case, is the idea, but a lotof savings are actually lost on the way, wasted on speculation.

Productive capital is today organised in corporations. They account foraround 80 % of sales in Denmark, up from 67 % in 1980, while smaller, per-sonal businesses have declined. A. P. Møller-Mærsk (oil, shipping, retail) is byfar the biggest company. In accordance with this trend, the share of inde-pendent producers (farmers, carpenters, shop owners etc.) has declined from12 % to 7 % in the same time span, thus increasing the share of wage-earners(“‘dependent producers”) from 88 % to 93 %. The hero of liberalism – theentrepreneur – has fared ill, because the corporations have taken over. Thistrend is probably valid for all capitalist countries (in the USA corporationsnow have a share of 90 %).

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Capitalism and Crisis in Denmark

Anders Lundkvist

Responses to the crisis

The crisis has forced a number of small and middle-sized banks to close,sell themselves to other banks or seek public assistance, thus increasing thealready very high concentration within the financial sector. Shares of DanskeBank have lost more than 70 % of their value since last summer, due to a largenumber of bad loans.

Under these circumstances, banks naturally hoard money (liquidity) as asafeguard, not wanting to extend loans to business. The central bank loweredthe official rate of interest without much effect, also because Denmark as anon-euro country must protect the Danish krone, which limits the possibil-ities of reductions. As in all capitalist countries, Keynes has been provedright: Traditional monetary politics do not work in a crisis where no onewants to take risks and all prefer cash. Therefore, in December and Februarythe government – together with the opposition – decided to extend loans tothe banks and at the same time issued unlimited guarantees on deposits, thuspromising to bail out big – especially foreign – investors. The first interven-tion did not work, and there is no reason to assume that the second will, sincethe loans are not conditioned on the banks actually extending loans to busi-ness. Probably banks will use the public credit to cover their bad loans.

What should have been done?

Since it is unfettered capitalism, also known as neoliberalism, which hascreated this mess, it makes sense to start curbing it by increasing taxes oncapital income, especially speculative capital gains. For many years, there hasbeen a strong trend in the opposite direction.

Since private banks previously lent irresponsibly to speculative companies,or invested in very risky securities, and since they presently are unwilling tolend at all, a public bank should be established, which can extend credit toworthy companies, especially of an environmental type. Neoliberals argue forcompetition between private and public suppliers, in, for example, care forthe elderly, so why not in finance, one might ask them? The Minister of theEconomy was horrified by such ideas, labelling them a “North Korean stateof affairs”, thus exhibiting a troubling inability to distinguish between a Stal-inist dictatorship and a democracy.

The basic reason for the crisis is that the financial sector, thanks to dereg-ulation, has swollen to become almost equal in size to the productive sector,in other words, the sector that only has a mediating function carries almostthe same weight as the sector which actually produces something. That cannever be a stable situation, and unless it is rectified we will have another cri-

cause the few corporations have forced the many independent firms to coop-erate in so-called “voluntary chains”, which coordinate procurements, selec-tion of commodities, marketing, campaigns etc. These chains are now eitherbought by private equity funds or their head offices have assumed more andmore power, effectively transforming the chains into corporations.

This Danish trend towards increased concentration, thus less competition,corresponds to the general experience. On the global level most of the impor-tant branches are now dominated by 4 to 5 large corporations, after numer-ous waves of mergers and acquisitions.

The crisis

It seems likely that the economic crisis will hit Denmark more severelythan many other European countries (extremes like Iceland and Ireland ex-cepted).

The right-wing administration of Anders Fogh Rasmussen has been gov-erning since 2001. Its stated goal is to restructure the Danish economy so asto boost the private sector and marginalise the public sector. According to theso-called “2010 Plan”, the growth in the public sector should be limited to0.5% annually, much less than that of the private sector. The government hasbeen only partly successful in achieving this goal, but its main instrument hasbeen a tax freeze since 2001, combined with occasional tax reductions.

The freeze on housing taxes inflated the housing bubble, helped by exempt-ing owners from repaying loans during the first years; it is the same effect thatwe saw in the case of the US-American subprime loans, where interest pay-ments were very reduced in the beginning. Private housing became more at-tractive, and prices soared, especially in the Copenhagen area. The OECDtherefore expects that prices will fall further than in most European coun-tries. The crisis will also hit hard, because Danish banks and pension fundshave speculated heavily in foreign securities. Danske Bank lost at least € 70million on Lehman Brothers, and bank loans have generally exploded, so thatin 2008 they exceeded deposits by € 80 billion (in 2004 deposits equalledloans). In 2008 a number of pension funds lost 30 to 40% of their value,meaning that many people must work up to 5 years more in order to securethe same annual pensions. So the problems are to a large extent self-inflict-ed, though finance capital and the government naturally prefers the tsunamitheory: “We did nothing wrong, all the problems originate abroad”.

On the other hand, Denmark can better afford an economic depression,since the country is rich and has very low unemployment (but it is increas-ing, especially within the building and export industries). Also, the publicbudget is nearly balanced, as is the balance of payments.

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tems, but it is fundamental. The principle of market economy is competitionamong so many producers and buyers that no one has economic power;Adam Smith’s “invisible hand” rules and is supposed to create order. Theprinciple of capitalism, however, is maximisation of profit, and in that pur-suit competition is an impediment, since it erodes profit. This impediment isto a large extent overcome in present day oligopolistic capitalism, where theprinciple of the market economy is turned upside down, since the large cor-porations rule over the market – they have “market power”. Markets exist,certainly, under oligopolistic capitalism, but the corporations can to a highdegree determine the prices and other market conditions; and genuine com-petition between independent companies gives way to “strategic alliances”between the few dominant corporations.

This is not all. As mentioned above, 67 % of world trade is controlled bymultinational corporations, but half of this trade takes place within the cor-poration, between mother company and daughter companies or betweendaughter companies, e.g. unfinished products are made in Thailand and thensent to the main office in the USA to be finished. This so-called “intra-firmtrade”, which thus comprises 33 % of world trade, takes place at prices decid-ed unilaterally by the head office, while in normal trade there are two inde-pendent partners, a buyer and a seller, who have opposed interests as towhether the price should be high or low. This implies that 33 % of worldtrade has nothing whatsoever to do with a market economy; it is capitalistplanned economy.

There is thus a lot of work to do for liberals who sincerely adhere to theirprinciples. I have not, however, encountered much apprehension about thedemise of market economy and competition; on the contrary, the trend hasbeen encouraged. Liberal politicians and institutions have approved almostall mergers and acquisitions (reassuringly called “consolidations”). To liber-als, market economy and the economic freedom associated with it is a facade,an ideology whose function is to conceal the capitalist reality. Competition is“Schein” (illusion), as Marx – a little prematurely – said.

Words are important. The left had a losing cause, as long as it accepted theconcept of “globalisation” (which you can be against only if you are againsthistory), but a winning cause when the deregulation of capital was politicisedwith the concept “neoliberalism”. Similarly, it is important to debunk all talkof “market economy” and instead name “capitalism”; all the facts here bene-fit the left.

The alternative to capitalism is socialism, but what is socialism? If it is notanti-capitalism it is nothing, but what is the positive definition?

Classical social democracy lost the struggle over the economy, but won po-litical democracy. The left must build on this victory, and work for the exten-

sis in five years. Therefore, finance capital should be deprived of its two mainsources, namely the funds from pensions and housing. These two vital areasshould be part of the public sector, thus substituting capitalist by democrat-ic regulation. Since 1980 the trend has been in the opposite direction. Thepublicly financed People’s Pension (“Folkepension”) has been marginalisedand substituted by private, tax-favoured pension schemes; in fact, the so-called universal welfare state, where taxes finance health, education and pen-sions for all citizens independent of income, has crumbled under the neolib-eral attack, which also has succeeded in privatising parts of health care whileeducation is increasingly organised on market principles.

At present, few would support such a clear-cut anti-capitalist reform, butwhen housing prices plunge and pension wealth evaporates, many peoplewill question the rationality of submitting these areas to the vagaries of theglobal financial markets. After all, most people simply want decent and af-fordable housing and a safe income in their old age; few consider their hous-ing and their pension “investments”, and fewer aim at winning the lottery.These areas should be part of the welfare state, not of capitalism, and on a parwith health and education.

What about the coming crisis in the real economy?

The opposition – the Social Democrats and the Socialist People’s Party –has argued for public investments, in order to prevent a steep increase in un-employment, but also in order to repair some of the damage done to schools,hospitals etc. by the government’s starvation policies in the previous years (inaccordance with its goal of marginalising the public sector).

Of course, the government, with its supporting party, the xenophobic Dan-ish People’s Party, does not want to hear of this. Instead, it realised that timesof crisis are also times of opportunity, namely to radicalise the neoliberalagenda. It has agreed on a tax reform, which lowers taxes in general, and es-pecially for the rich. Probably this will have no effect on unemployment(though – strangely – the government has argued that the reductions in tax-es on work will lure us to work more, which – if true – will increase the sup-ply of labour and thus unemployment).

Capitalism versus democracy

In the neoliberal era there has been an unmistakable trend from marketeconomy toward capitalism, more specifically toward oligopolistic capital-ism, in Denmark as well as globally.

Many, also on the left, do not recognise the difference between the two sys-

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References

Dunning, J. H. (1992): Multinational Enterprises and the Global Economy,Addison-Wesley 1993.

UNCTAD: World Investment Report

Lundkvist, A. (2009): Den danske kapitalisme og demokratiets forfald(Danish capitalism and the demise of democracy), in: A. Lundkvist (ed.):Dansk Nyliberalisme. Frydenlund

Lundkvist, A. (2004): Hoveder og Høveder. En kritik af det private samfund(Democracy vs. Capitalism. A critique of the private society), 3. vol.,Frydenlund

sion of the democratic principle to the economy. Modern socialism isdemocracy fulfilled, nothing more and nothing less. From this perspective,public employees do not represent a detour from the real struggle (suppos-edly between labour and capital). The public sector must be defended, ex-tended and cleansed of marketisation, because essentially it is ruled by par-liament and thus is the democratic sector; as opposed to the private sector,where influence depends on the amount of money you can spend on con-sumption or investments.

Democracy encapsulates the basic principles of socialism. “One person,one vote” means that we are equal when deciding, thus assigning us all equalvalue; and the obligation to accept the will of the majority institutes solidar-ity as a basic value. These are powerful principles that can stand up withouta problem to the basic value of liberalism, namely individual freedom (whichis, from the critical point of view, equal to selfishness and asocial behaviour).“Liberal democracy” is a self-contradiction, since individual freedom impliesa negative attitude towards the state, democratic or otherwise. This funda-mental apprehension about democratic rule is clearly stated in the officialprogramme of the Danish Liberal Party (Venstre), which favours minimaldemocracy: “Elected assemblies should concern themselves with as little aspossible, as competently as possible.”

There can be no going back to market economy. As Marx pointed out, thisway of coordinating the economy is unstable, since competition means thatthe big fish eat the small fish, thus ushering in capitalism and, eventually, mo-nopoly capitalism (which in his terminology actually includes oligopoly).The hand has gone from being invisible to being extinct. Economic coordi-nation has to be planned consciously. The choice is whether this planningshould be directed by capital, through oligopolies, strategic alliances and in-tra-firm trade, or by democracy. Should the governing principle of a plannedeconomy be influence according to how much money we have, or should wehave equal influence according to the principle: one person, one vote?

But principles are one thing, what works is another. The present economiccrisis seems to show that democratic organisation of the economy couldhardly be less efficient than rule by capital.

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Financial Crisis andthe Remaking

of the Society ofLabour in Spain

Armando Fernández Steinko

the mid 1970s, when the public sector already amounted to 30 % of GNP inmost developed nations, in Spain it remained at 12 %, even three points be-low Portugal under Salazar’s dictatorial rule.

This convergence between the “atlanticist” sectors of late Francoism andthe liberal democrats consolidated the embrace of monetarism among theSpanish elites even while admitting the need for a European-style welfarestate. This alliance was able to enforce a classic “reformist” transition in thecritical years of the democratic transition. Given this early (neo)liberal biasthe answer to the crisis of Fordism consisted in sacrificing the “society oflabour” and replacing it with an economy highly dependent on finance andshort-term foreign investment. The welfare state was built without a produc-tive foundation strong enough to make it sustainable in the long term.

Real economy and rent economy in Spain’s history

The relations between productive economy and rent economy have a spe-cial significance in Spanish history. The enduring blockade of the country’sdevelopment since the early modern age has its origin in the long warsagainst Moslem rule which resulted in a draining away of the productiveclasses due to the deportation of the “Moriscos” and the Jews. The world oflabour was weakened as the military and the aristocrats gained power. Pre-cious metals sustained this regime even though the kingdom lived on thebrink of bankruptcy until capitalism knocked at its doors in the 19th century.

The Civil War resulted in a kind of restoration in terms of the dialectics be-tween an economy of rents and a productive one even if in a very differenthistorical framework. The Second Republic had proclaimed itself a “demo-cratic republic of workers of all classes which is organised according to aregime of liberty and justice”. Beyond the actual military defeat of the work-ing class, the fascist forces liquidated its very spaces of socialisation, particu-larly those of the more qualified segments concentrated in the more devel-oped provinces. Francoism was very aware of the political significance oflabour in Spanish history, not only in view of its strong Republican militan-cy but especially due to its capacity substantially to alter the balance of forcesbetween classes.

This historical background helps make sense of the monetarist coalition ofthe transition. The early financialisation of the Spanish economy and socie-ty ended the short spring of labour of the early 1970s and caused a gradualreturn to the society of rents which in its turn became more and more de-pendent on international financial centres.

Since the mid-1980s the relative weight of finance and real estate has beengrowing. The successive “socialist” governments abstained from industrial

Very unequal realities underlie the visions shared by the European left.Understanding the specificity of the Spanish situation in the current cri-

sis requires taking into account at least two key issues: first, the decline of thesociety of labour which took place in the 1980s amidst the general euphoriaof democratic consolidation; and second, the role played by real-estate capi-talism in the financialisation of the Spanish economy and the subsequentsurvival strategies of the middle and popular classes.

The monetarist grand coalition at the time of democratic transition

In Spain the neoliberal counter-revolution was characterised by a particu-larly political subtlety because it intertwined with the strategy of the centre-left which at that precise time was engaged in building a sort of welfare statemuch longed for by the Spanish people.

The dismantling of the Spanish society of labour cannot be understoodwithout taking into account a central reality: the grand coalition betweeneconomic liberals and late “Francoists”. Very early on, the former embracedeconomic liberalism as a strategic stance against what they took for an his-torically and culturally obsolete state interventionism. Paradoxically, al-though the “Francoist” state was in fact interventionist in political and cul-tural affairs and heavily reliant on repression, since the early 1960s econom-ic policy was in the hands of an extremely liberal elite trained in the USA. By

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Financial Crisis and the Remaking of the Society of Labour in Spain

Armando Fernández Steinko

Neoliberalism creates insecurity, degrades the quality of life and destroysthe environment. However, when there is no social majority capable of de-feating it the popular classes must find strategies to survive. Neoliberals arefully aware of this, and they devise policies reinforcing these adaptive mech-anisms in order to retain hegemony. The great contradiction within theSpanish left is that the welfare state has been built with funding rooted in ne-oliberal orthodoxy. But this financialised welfare has left a deep cultural foot-print especially in health care and education. The long neoliberal winter can-not otherwise be explained.

The problem lies in the medium term unfeasibility of this unholy alliancebetween rentiers, unproductive entrepreneurs and the popular and workingclasses. Better education sharpens the acute contradiction between a grow-ing qualified workforce and the lack of democracy at the workplace. Mil-lions of relatively skilled and well educated young people in Spain have gotno chance of getting decent jobs. Casualisation causes young people to livewith their parents longer, lowers the birth rate and makes the education pro-vided by the public system unproductive. This situation is being confrontedby the Spanish government with a reform of higher education aimed at cur-tailing the access of the popular classes to the university, using the BolognaPlan as an excuse. The result will be the destruction of one of the most cher-ished achievements of the democratic transition, which is being justified bythe lack of demand for highly qualified workers on the part of Spanish em-ployers.

Real estate and popular finance

Another crucial factor underlying this lasting hegemony of the centre par-ties during the neoliberal winter has been the role played by real estate andthe Spanish system of popular finance. Until now the Spanish banking sys-tem has managed not to be dragged into the turmoil of the international fi-nancial crisis. Spanish particularities are twofold: on the one hand, theSpanish banking system has so far been able to avoid the destruction ofover-accumulated capital; on the other hand, the real-economy crisis whichis resulting in rapidly disappearing jobs has preceded the financial one,which is the reverse of the way the crisis has developed in the core capitalisteconomies.

This apparent solidity of the Spanish financial system can be explained inseveral ways. First, Spain suffered two severe bank crises: one of them threw58 banks into bankruptcy between 1978 and 1985; the second took place in1992 to 1993, also connected to a housing bubble and with unemploymentrising to 24 %, when the then largest Spanish private bank, Banesto, went

policy or any other active intervention in the country’s productive structuresand promoted the sale to foreigners of the most dynamic portions of publicand private industry, in many cases through speculative operations. On theother hand, a very active policy was carried out to protect national ownershipof financial institutions, rescuing many banks which had fallen victim to thebanking crisis.

Ugly capitalism

The results of this attack on the society of labour and by extension on thecountry’s productive economy have been very far reaching. First, job quali-ty and working conditions were downgraded in record time to the benefit ofthe less innovative Spanish entrepreneurs. Second, value chains have beensplit and scattered all over the territory through a very aggressive outsourc-ing policy. Third, employment has concentrated in environmentally unsus-tainable sectors such as construction, mass tourism and car making. High-way transportation has become a key factor for mobility in a spatially dis-persed and ill-planned territory. This allows for dualisation of the labourmarket and consumes lots of space, lengthens commuting time and causeshigh levels of energy consumption and carbon dioxide emissions. It is notmere capitalism but ugly capitalism.

This model has resulted in an extraordinarily flexible economy approach-ing the ideal of an open economy as advocated by neoliberal theorists. Thecountry managed to achieve a surplus in public budgets even in the contextof a chronic unemployment rate never going below 10 % thanks to beingone of the countries with the lowest social expenditures in the EU. It wasalso able to create in short time half the new jobs in all of Europe in the pe-riod 2000 – 2006, although it later destroyed them at an even faster rate.This is why Spanish openness is systematically praised by international fi-nancial organisms.

The dark side is that low productivity is not compatible with Spain’s con-sumption level, resulting in the largest trade deficit in the world, more than10% of the GNP. Moreover, favouring rents over the productive economyhas long-term consequences. The more profitable public firms were priva-tised (Repsol, Endesa, Telefónica, Banco Hipotecario, etc.) only to pay for acouple of years of welfare, a method which is unsustainable as it lacks a siz-able productive economy behind it. Nationalistic conflicts, which since the19th century have overlapped with the conflict between a rent economylargely prevalent in Madrid and a more productive orientation in theBasque Country and Catalonia, have hardened, causing an upsurge in se-cessionism.

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the current situation. Lastly, the FGD can be easily depleted if any of the largecajas need to use this facility. In this case the supposedly healthy Spanish fi-nancial system will also fall victim to the crisis.

The Spanish government has for some time been preparing public opinionfor an eventual intervention in some cajas. Some of them have begun aprocess of merging in anticipation, after the international agencies have re-vised their risk rating. Some experts believe that the situation of the Spanishfinancial sector can become even more critical than the American one ifhousing prices keep falling. This could explain the recent initiative of thesmaller and medium sized cajas which have created an asset holding compa-ny centralising unsold property and controlling its marketisation to avoid aprice collapse. Financial engineering with the balance-sheet evaluation ofthese “junk” flats can also postpone the slump.

The honeymoon between the popular and rentier classes

The housing-plus-finance complex explains fairly well the current socialand economic situation in Spain, its historical origins and present vulnera-bility. The thin welfare policies in the Franco era forced Spanish families toinvest in real estate for more than five decades. A house was more than ahome, it was saving for the future. The crisis of the society of labour mademore acute this dependence on real-estate investments. The result is a quiteunique situation: 90% of families own their homes and 77 % of these are ful-ly paid for. Price escalation and bubbles caused by the rentier classes havestrangely also benefited sectors of the popular classes. High housing priceshave not only postponed the age of emancipation for Spanish youth but alsohave helped in “capitalising” Spanish households whose net assets havetopped 500 % of GNP. Houses amount in Spain to 88 % of non-financialwealth, the largest percentage in the OECD countries except for NewZealand. This helps alleviate social inequities without resorting to big financein a country where the society of labour is minimal. This option of house-as-savings financed by cajas provides families with a better safety net as com-pared to other countries with precarious labour markets where financial as-sets play a more decisive role in the survival strategies of families.

The ideological mirage caused by such a situation is evident. Generalisedproperty and solidarity networks among relatives provide the collateral forloans. Two thirds of the houses are second residences bought as investmentsto balance the lack of job security; in case of foreclosure one can move toone’s parents’ second residence and nobody is left on the streets.

But things have radically changed in the last months. Private debt has risenin a short time from 40 % to 80 % of GNP while the net assets backing that

bankrupt. Due to these experiences the Bank of Spain toughened anticyclicrisk-prevention measures, surveillance was heightened and the mandatoryprovisions for the FGD (Deposit Guarantee Fund) were raised well over theaverage levels in other developed capitalist countries. Even though the possi-bility of depleting these reserves under current conditions does not justifymuch optimism, it is true that these measures have temporarily protected thesystem from the financial crisis.

A second reason for this apparent stability can be found in the relativeweight of the Savings Banks (cajas) in the Spanish financial system. Sincetheir creation in the 19th century, cajas have retained a substantial degree ofmutualism and remain strongly tied to municipalities, thus resisting any in-tention of subordinating them to big finance. Only after the Civil War was itpossible to place them under a kind of state control. Democratic transitionreturned them to looser regulation making them almost the only economicspace where democratically elected representatives sit in governing bodies.Local and regional governments choose between 20 and 60 % of the seats andeven the workers’ representatives hold between 5 % and 15 %. Although thePopular Party made some moves toward privatisation, allowing the issuanceof “cuotas participativas” (a sort of preferred stock), not even the politicalright dared changing their juridical constitution and their relationship withlocal and regional interests.

The 46 cajas’ influence is not only large but has grown in the last years.They hold 52 % of deposits and employ 120,000 people in 22,400 branches,the densest network of retail banking in Europe. This does not mean thatthey are immune to crisis. They cannot be because they are not supported bya robust enough productive economy. First of all, the lack of other produc-tive activities has rendered the municipalities financially dependent on taxesand revenues from real-estate development. Since local governments sit onthe cajas’ boards they have forced them to engage in many financially and en-vironmentally wild operations. Credit to housing activities has multipliedtenfold in the last eight years while the net assets of the cajas has only dou-bled. This can provoke a serious problem of insolvency if developers begin todefault. Symptoms are already present: prices have dropped by 20 % and thestock of unsold flats is expected to amount to 1.5 million by the end of 2009.

Second, as cajas cannot raise capital as easily as private banks can, they willbe forced to rely on state aid sooner than their competitors. This is alreadyhappening (March 2009): cajas, both large and small, have used up to 70 %of the liquidity facility provided by the Treasury.

Third, many cajas have relied on foreign finance through Mortgage BackedSecurities sold in European capital markets during the bubble years, and thisdebt is reaching maturity. Probably these credits will be difficult to revolve in

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has been passed allowing not only the nationalisation of banks but even theexpropriation of stakeholders, in Spain, as in the USA and the UK, the rentierclass has not yet been cornered by other fractions of the dominant bloc. Thecrisis can weaken this power depending on the existence of an alternative, i.e.on the ability to forge a new historic bloc around the society of labour.

A new historic bloc

Not only the very existence of a new historic bloc but its colour, its inter-nal balance, are open to the future. An alliance between organised and unor-ganised labour, non-conformist sections of urban professionals – includingthe “no global” movement – and some innovative entrepreneurs could initi-ate a momentum for more ambitious goals in a socialist sense. But if thistransformation occurs from the top down, as a new pact among political andnew economic elites, eventually including the more conservative section ofunionised labour, the outcome can be a passive revolution much in the fash-ion of what happened in western countries after the last world war. Perhapsthis formula is already unconsciously taking shape in the minds of the centrepoliticians who have rejected monetarist dogma and now speak of “refound-ing capitalism” and of a “second Bretton Woods”.

In my opinion even if the Spanish left proves unable to lead such an alter-native it will nevertheless be in better shape to regroup in the middle termand so have another chance. Provided, of course, the crisis does lead to an ex-tremely adverse situation, which could be the case if the national conflict isexacerbated or the extreme right gains substantial support. In any case, if themonetarist grand coalition breaks up this will itself be an historic step for-ward and will force a revision of the consensual map drawn during the tran-sition of 1978, including the very constitution of the state.

The creation of a new economic model relying on productive labour wouldseem to be an unavoidable step in any strategy seeking more ambitious so-cialist goals or even a meaningful environmentally friendly transformation.It would be a mistake to think this can be achieved by merely raising realwages or reducing work time. It is not a matter of better salaries for the samejobs with little creative and no decision-making content nor is it a questionof better qualification through public education. The question in Spain is tosubstantially enlarge the number of jobs providing for decision-making ca-pacities and creative content. This could give an impulse for a democratisa-tion of the economy. It is in this very sense of democratisation that the leftshould leave its imprint on the upcoming economic restructuring.

A public sector supported and controlled by a dense social fabric of citizensshould act as a catalyst for this process creating a political leadership and

debt have fallen from 500 % to 350 %. This signals the end of real-estate-based popular capitalism, the alliance between rentiers and workers.

The crisis of the historic monetarist bloc

Current forecasts are predicting that the drop in GNP is going to be thesharpest since the Civil War and that unemployment will affect nearly 20% ofthe total active population in 2010. It is the third time that this much celebrat-ed “flexible” entrepreneurial system has ruthlessly contracted since the demo-cratic transition. Zapatero’s government, clearly surprised by the crisis as havebeen most of its western partners, is reacting in similar ways. The publicdeficit is escalating and is expected to rise to 6 % after the fiscal injection pro-vided by the government. Even family solidarity has its limits, as there are al-ready 800,000 households with all their working age members on the dole.

Behind the ideological mirages generated by real-estate capitalism, thefragility of the society of labour is pushing working class families to specu-late with real estate in the same way as working class families in other coun-tries are driven to financial gambling. This rent economy relies entirely ondebt in an ever growing dependence on the financial sector. The peseta couldnot stand up against speculation and indebtedness in the 1980s, but the in-troduction of the euro and the low interest rates provided by the ECB madeit possible subsequently. The neoliberal EU has thus contributed to main-taining the historic problems of Spain, reinforcing the monetarist alliancewhich took hold during the democratic transition.

Here lies the substantial meaning of the current crisis for the country’s un-derlying social and political dynamics. What is new is not the fast growth ofunemployment nor the intention to profit from the conjuncture, in expand-ing casualisation. Neither is the financial crisis new, having already come toSpain twice in 1978 to 1985 and in1993. What is new is that the housing cri-sis can hit the cajas too hard this time and put an end to this very particularSpanish system of popular and regional finance. But even this does not im-ply a radical change in historical trends. The real historical turn lies in thepossibility of a generalised take over of international finance by states and thebreaking of the class power of global finance. Spanish big finance will thenlose one of its main supports and with it a substantial part of the power ac-cumulated since the (last) defeat of the society of labour in the mid-1980s.This will bring down the monetarist historic bloc responsible for the passiverevolution and create chances for a new alliance based on rebuilding the so-ciety of labour.

While in France bank mergers and public money injections go hand in handwith a growing presence of the state in management, and in Germany a law

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grow but must be better distributed throughout all Europe. The uneven con-centration of productive activity has consolidated during the past decades ofneoliberal rule. A common project cannot be articulated in Europe unlessthis productive geography changes and political, economic and technologicaldecisions are diversified to more regions. Of course this calls for a coordina-tion of fiscal policies and other democratisation measures which have beenadvocated by the European left for a long time. The crisis is generating cen-trifugal motion and a tendency toward protectionism. The left should rejectthis, but this does not mean rejecting the need to make local economic cir-cuits more resilient. Cosmopolitanism and solidarity are compatible with lo-cal social and economic vitality and a less export-oriented economy.

generating a large part of the new quality jobs. But it should ally with themost innovative sectors of entrepreneurs including the Basque ones. The lat-ter would seem to be key allies not only because they tend to specialise in ac-tivities with high added value but as a valuable aid to the Spanish left in itsconfrontation with the reactionary Spanish bourgeoisie in order to build anew shared identity. Mass tourism and new housing construction should losetheir currently excessive share in GNP to renewable energies, especially solarenergy, quality social services, education, research and development, ... Pri-vate banking should be subject to public control and to productive interests.In a similar way, houses must cease to exist as exchange values and becomeaffordable houses to rent with public guarantee. This would provide a pow-erful incentive to the emancipation of the youth, to rising birth rates andwould enhance total factor productivity. Civil society must expand its partic-ipation in the management of the cajas which should become more transpar-ent and accountable. Growing employment and progressive taxes would fos-ter municipal finances, freeing them of their dependency on real-estate. Thiswould put a check on both corruption and environmental disasters.

Spain is confronting another challenge: redefining its economic geography.Internal markets, not foreign ones, should be the major economic thrust –specifically, the role of local economic circuits based on municipalities andgroupings of these. The municipality is at the core of Spanish popular anddemocratic traditions, being the easiest level on which to engage people inpublic affairs. But this requires locating workplaces near homes and develop-ing new sustainable infrastructures in the neighbourhoods. This will reduceenergy expenses and greenhouse emissions, lower commuting time and rec-oncile work with leisure and family life. A deep change in the habitationaland economic geography is needed; a transformation that will take two gen-erations and will create innumerable jobs.

Europe and the Spanish left

This project must be coordinated on a European scale. It is very difficult forit to succeed if other countries persist in carrying out policies aggressivelyoriented to external surplus. Higher wages will not create jobs in Spain butin the productive centres in Europe, unless the other countries expand theirown internal markets increasing wages and cancelling neo-corporatist com-petitive strategies. Otherwise, current imbalances will increase even further.

This is a serious challenge for the European left, including the unions. Amore concrete definition of European solidarity is needed: a better adjust-ment of trade balances and an abandonment of the neo-competitive projectscurrently cherished by the ETUC. This means that better jobs must not only

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Crisis and the CzechRepublic: Political

Observations from the Left

Jir í Málek

– “socialist” – property and we want to manage it ourselves and in a capital-ist way. The process of property transformation was a huge political experi-ment carried out by economists who did not belong to the hardcore dissidentnucleus opposing the Communist regime. Most of them came from the sci-entific and theoretical state institutions, having studied the “criticism ofbourgeois economic theories” as part of their scientific work. However, formany of them, their gurus were Friedrich von Hayek and Milton Friedman,whom they zealously followed. They had a unique opportunity to implementtheir theories in real life without having to take into consideration the realpolitical limits that might impede them. Obviously, diverse concepts of prop-erty transformation and privatisation emerged. Supporters of the gradualistapproach did not prevail. As Joseph Stiglitz said, in the beginning the argu-ment was that those opposing shock therapy and preferring gradual changewould be risking the region’s reversion back to Communism. History hasshown that this danger was a fiction, in the Czech Republic as in all otherpost-communist countries. According to Stiglitz, there had been an historicstruggle in Czech territories against inequality, which gave the Czechs a goodchance of building a market-oriented yet still quite just, egalitarian and co-hesive society after the political overturn. The Czech Republic was not bur-dened with a huge property gap. However, the transformation did not createa market-oriented and yet cohesive economy. Human potential was not be-ing developed and corporate governance was underestimated.

The first response of the people to voucher privatisation was not very posi-tive. Only after deploying other tools, including propagandist ones, and afteractively involving such people as Viktor Kozeny (later known as the “Pirate ofPrague” on account of his conflicts with US laws), the process really got un-derway and the population started massively to buy privatisation vouchers.These property flows took place within very weakly defined legal limits andwithout any moral dimension. However, it was not only about the economy.This experience influenced the business environment of the next two decadesand contributed to the current low regard in which the legal and moral as-pects of the economy are held. The privatisation process also had a social andpsychological impact on many ordinary people who learned that rules andlaws were not too important. They learned that what is decisive is the abilityto assert oneself, individualism, toughness and ruthlessness. Empathy, humansolidarity and tolerance were suppressed. Individualism and the need to useone’s elbows were also instilled into the new young generation.

Nobody has quantified or defined this non-material loss caused by suchprivatisation.

Transformation costs were borne by the population with their silent assentor sufferance.

Twenty years ago, in late November 1989, the division of Europe came toan end. At the time, people were generally full of hope. The last 20 years’

development has determined the current situation as well as the understand-ing of, and response to, the evolving crisis.

The past twenty years

What happened in those years? After the “Velvet Revolution” was accom-plished, a transformation of society, of the economy and people’s mindsetbegan to emerge. This uneasy process affected everything. At the beginning,few knew what would happen. People’s expectations were quite uncomplicat-ed: most expected an improvement. The “things” that they disliked under theprevious regime would no longer exist and the “things” that worked well andthat they liked would be preserved.

Economic transformation soon began. It can be divided into several stages.In the first stage, the “small-scale privatisation” approach was adopted, inwhich smaller-scale state property was auctioned off to create the social stra-tum of “sole traders” (independent small businessmen). It was followed bythe next, key step, “large-scale privatisation”, which was based on vouchers.Among other things, voucher privatisation responded to the subconsciouswishes of the population (a mixture of communist and capitalist beliefs) thatcan be summed up in this way: we want to be given a share in our common

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The development of the political situation can also be illustratedby a brief overview of the election results (% of votes):

1990 1992 1996 1998 2002 2006

OF-ODS 49.5 (OF) 297 296 272 245 354SD 41 65 264 323 302 323KSCM 132 141 103 110 185 128KDU 84 568 81 90 14.1 * 72Republik. 60 80 39 1

Abbreviations: OF – Obcanské fórum (“Civic Forum”) – at the centre of politicalchanges in 1989; ODS – Obcanská demokratická strana (“Civic Democratic Party”) –leading liberal right-wing party; KSCM – Communist Party, includes a left-wing coali-tion, when extent; KDU – Christian Democratic (People’s) Party,*in 2002 in coalition; Republicans – right-wing nationalist party.

The Czech radical left was further weakened by its rupture in the early1990s. Two groups began to take shape: one could be called traditionalist, andthe other followed in the tradition of the 1968 activists and of what used tobe called Eurocommunism. It is sometimes said that Stalinism is the maincharacteristic of the traditionalist group and that it is clinging to the outdat-ed Communist past. Adherents of Stalinism and of the Communist past doexist, but in the actions and politics of the Communist Party, neither of thesedominate. The general public has expressed the following attitude towardsthis party: indifferent/reserved – 40 %, negative as a matter of principle –24 %, positive – 31 %, no response – 6 % (survey by KSP (Club of Sociolo-gists and Psychologists), 2007).

Compared with other post-communist left-wing parties in Eastern Europe,the Czech radical left has been weakened throughout the post-Communistperiod and has never been able to become the governing party. On the otherhand it continued to be a significant player in the political arena. The re-maining Czech radical left organisations remained marginal, although Stranademokratického socialismu (Party of Democratic Socialism), with its pro-European yet left internationalism, has achieved a certain importance, whichis more significant at the international level than in the Czech Republic assuch.

Czech economy and society and the crisis

The Czech economy is very open, and thus not very different from otherpost-communist countries of Central and Eastern Europe. Any global crisiswill soon affect the domestic economy. The national government is in a veryweak position vis-à-vis supranational economic structures and processes.

Often, once a company sold through voucher privatisation proved to be apromising business operation, all means were used to push out the smallshareholders, and ownership was concentrated, sometimes using very roughmethods.

We have been bequeathed a permanent problem whose origins date backto the very beginning of the entire process: In order to make society dynam-ic and competitive, it is necessary to dedicate its resources to education andinfrastructure. In the early 1990s, the Czech government owned all the assetswhich could allow it to undertake this necessary social transformation. Theseassets were sold by the government to new owners who often stripped themwithout creating any wealth. This led to losses. Subsequently, the Czech gov-ernment had to pump money back into the public sector. As Joseph Stiglitzsays, this is how a vicious circle arises. First you get rid of something with lossand then you acquire it again with loss.

What about the left?

There was no integration of leftist concepts, either in theory or in the de-bates. It was as if society were walking on one leg. Leftist ideas were not real-ly formulated, not to mention communicated to the people and publicly dis-cussed. The left, especially the radical left, spent most of its time defending it-self. The attacks directed against it did not address the essence of the prob-lems; they amounted to little more than the accusation: “You defend the pastcommunist regime!” This was the argument used to answer the analyses ofmost of the radical and communist left regarding present-day problems.Since the left was exhausted by defending itself and by internal discussionsprimarily concerning the past, there was no energy left for seeking alternativeleft solutions and outlining alternative ways out. Social democracy? It was anadvocate of “soft solutions” to globalisation issues and a liberal approach tocontemporary capitalism. It identified itself with Blair’s Third Way and itsadaptation to Czech conditions. There is no doubt that it emphasised the so-cial dimension of the society’s development, but in the end, it was limited tothe liberal-capitalist framework without offering any alternatives to society.This made it no different from other European social democratic parties.

It is necessary to recognise that the ruling right-wing politicians (especial-ly former Prime Minister Václav Klaus), despite their liberal orientation andrhetoric, carried out a pragmatic policy in real life; they sought to avoid anexcessive escalation of social tensions, and, tactically, they even ceased to pur-sue some of their original goals. Sometimes this even led to criticism fromthe right side of the political spectrum.

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stagnated or its growth rate declined (e.g. in the rural population, among tra-ditional working classes, pensioners). Trends usually do not exist across thewhole territory; and this phenomenon was also regionally differentiated.However, it is a fact that poor regions began to appear, while the Prague re-gion grew above the average of the EU.

Czech society is still among the most egalitarian. This has been confirmedby a comparison of economic and statistical data as well as by expert opin-ion. However, many Czechs do not feel that way. A major section of Czech so-ciety sees the wealth gap as increasing and as socially unjust and improper.

The results of a recent public opinion poll (KSP, 2007) asking people toclassify themselves on a scale of rich to poor show two fifths of respondentsclassifying themselves as poorer.

The living-standard-satisfaction surveys have shown very stable resultsin the long term. In the four years examined the answers hardly changed,even though this was the period with the greatest macro-economic re-sults of the last twenty years.

A detailed breakdown shows the answers from the living-standard-satisfactionsurvey with more differentiation:

The integration of the Czech economy into the world’s globalised econom-ic relationships can be illustrated through figures. The figures compare theCzech Republic with certain states.

Tendency of the share of export in GDP in % (OECD) Country 2004 2007Belgium 902 862Czech Republic 724 850Hungary 648 801Slovakia 681 800Ireland 855 794The Netherlands 672 704Austria 510 548Switzerland 469 533Sweden 470 495

This situation is the result of the joint policy of both right-wing and socialdemocratic governments. None of these governments ever doubted the needto open up the economy. Investment incentives and orientation to foreigncountries have been at the core of the last two decades’ economic policy. Ob-viously, the acquisition of foreign capital, the positive impact on employmentand maintaining social peace were good and valued results. However, this isa policy for peaceful times. In difficult times, the situation of such economieswith an extreme degree of involvement in the international division oflabour is insecure. According to an analysis commissioned by the Czech tradeunions, the Czech economy has become a mere complement of strongereconomies (especially that of Germany), fulfilling the function of reserve ca-pacity used primarily in boom years and abandoned in times of crisis. Thisis especially true if the value of national labour does not improve sufficient-ly and if the comparative advantage is primarily based on low labour costs.This is, moreover the case in all of Central and Eastern Europe, whose coun-tries are suffering the consequences of being such unilaterally openeconomies. This is evidenced for instance by the 3 % decline in Hungary, 5-10% decline in the Baltic states, potential state bankruptcy of Latvia, the verydifficult situation in Romania, and by a double-digit plunge of industrialproduction in Slovakia. Up-to-date figures from the Czech Republic show aquarterly decline in GDP dynamism in 2008: it rose by 4.9% in the first quar-ter, but by only 0.7 % in the fourth quarter.

This decade has witnessed transfers among social groups. It would be over-simplifying and incorrect to say that the wealth of some of these groups de-clined (i.e. they became poorer). With some exceptions, their wealth mainly

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Czech specificity does not lie in the economic situation but in the politicalperception and interpretation of the crisis. Specifically, it was the lack of willof the governing right-wing to face, recognise and identify the situation andadopt political measures in a timely manner. In autumn 2008, the argumentwas that the crisis would bypass the Czech Republic and if there were to becomplications, they would be only minor ones, without any major impact onthe population. In the beginning of December 2008, the Czech Prime Minis-ter said in his forecast for the next period that a significant crisis alternativefor 2009 would be growth (!) lower than 2%. Today, the same person says thatthe real forecast is a decline (!) of approximately –1%. Much expert opinionis even more negative. The liberal right-wing Czech community consistentlycriticises the “haphazard measures” adopted by the other EU member statesand suspects them of being a hidden promulgation of “European socialism”.They are still sticking with their iconic demand for the “freest possible mar-ket”. But at the same time and with minimal noise, they are trying to realisetheir political and economic goals as a “by-product” of the fight against thecrisis. These goals are the concept of direct taxation and social-insurance re-duction, i.e. “undercutting” of public finances. This would significantly dis-solve social solidarity under the motto that everyone must be responsibleonly for themselves. Interestingly, current analyses of the crisis indicate that“people have been living beyond their means”, and this must change. Appar-ently, this statement is not meant to refer to the current political and eco-nomic elites. They lived within their means. Recently, the Czech Prime Min-ister, while defending the tax adjustments to the benefit of high-incomegroups, said that “the middle class had already received their share”.

For the Czech situation, there is another important difference. Statementsabout defending the welfare state seem inappropriate in the Czech context.We have almost nothing to defend and people are not able to imagine any-thing specific meant by the “welfare state”. The welfare state, as understood inEurope in the second half of the 20th century, did not exist in our country.Obviously, the past communist political and economic system had built inmechanisms and tools that might be perceived as part of the welfare state andthat fulfilled its purpose. However, the transformation concept did not men-tion a welfare state. Under the guise of criticism of the “communist regime”,addressing the issue of the welfare state was carefully avoided. For instance,in the early 1990s, experiments such as replacing employment with the hir-ing of “free-lancers” were initiated. Each worker and craftsman was to be-come a “sole trader” (small independent businessman). The companies hir-ing labour thus cut cost and shifted most of the risk to those selling theirwork. A recent example is the import of a Vietnamese workforce, where var-ious agencies do not import people as employees but organise their arrivals

All these data should be considered in the context of the overall economic develop-ment in the Czech Republic since the early 1990s. Here are some statistical data:

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

GDP 4.0 -0.7 -0.8 1.3 3.6 2.5 1.9 3.6 4.5 6.3 6.8 6.0Wages 7.8 8.7 8.7 1.3 -1.4 6.2 2.4 3.8 5.4 6.5 3.7 3.3 3.9 4.4Pensions 47.0 44.4 43.8 43.5 45.3 45.9 45.2 44.2 43.4 43.5 42.2 40.6 41.1 40.8 40.6Inflation 20.8 10.0 9.1 8.8 8.5 10.7 2.1 3.9 4.7 1.8 0.1 2.8 1.9 2.5 2.8

GDP – annual real growth in %Wages – annual growth of average real wage in %Pensions – ratio of average pension to average wageInflation – annual average rate

In 2008, the average (nominal) wage was CZK 23,542, i.e. approximatelyEUR 840 (compared to the average wage of CZK 6,095 in 1993). Interesting-ly, price levels are almost the same as in the neighbouring states; the prices ofsome goods are even higher in the Czech Republic. With regard to the aver-age wage spread, it is important to note that two thirds of the population re-ceive a wage which is below the average.

In terms of the economic crisis, there is a difference between the Czech Re-public and the traditional Western European capitalist states. Nevertheless,the roots, manifestation and impact of the crisis on individual economic seg-ments are identical or similar, or only different in terms of time.

Some phenomena are more distinctive and radical in Western countries,for example the mortgage and banking crisis. Czech political leaders aremore or less right in evaluating the banking crisis. In our country, the crisishas not evolved and the Czech banking sector has not been affected as muchas in other countries. Nevertheless, the reason for this is that Czech banks hadalready been on the edge of a precipice in the late 1990s and were saved onlythanks to massive state intervention, paid as always out of the taxpayers’pockets. These revitalised banks were then transferred to foreign hands.There is no purely Czech bank at the moment, i.e. all banks are controlled byforeign economic entities. And all parent banks are among those having ma-jor or minor problems. As we can see, the banking crisis had already beenpresent in the Czech Republic.

The mortgage crisis did not affect our country because the Czech mortgagebusiness is too recent a phenomenon and therefore did not have time to be-come infected.

As in other countries, the economy in the Czech Republic is approachingred figures, but not in a dramatic way, and compared to other Central andEastern European states there is no reason to panic (for the time being). The

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funds to the struggle against unemployment. Behind the curtain we can senseconcerns about social unrest. Officially, there are no such concerns in theCzech Republic and there is no real reason for them for the time being. Nev-ertheless, the Czech secret police has already warned of this potential threat.Still, a revolutionary atmosphere does not correlate with GDP trends, at leastthe experience of the last decades shows this.

Even the crisis can become a battlefield using PR tools. It is quite commonfor the mass media, especially public media, unambiguously to support oneand the same concept. In this sense, the time-proven tradition of the pastregime continues, and the current practice is only more sophisticated and ef-fective.

The beginning of this year was marked by the mobilisation propaganda ofall right-wing and liberal forces. Concerns about “socialism” have been pro-nounced everywhere. Those who remember the past regime would confirmthat the same mechanisms were used then to advocate policies and claim cer-tain realities that at least deserve discussion. It seems that the Czech Repub-lic is the last island of a liberal approach that considers Keynes a “suspiciousleftist”. A reflection of this is an article by Czech President Václav Klaus inThe Times, which fiercely criticised the works of Karl Marx and the mentionthey are receiving at present.

The rescue packages of the Czech government are designed primarily togive direct help to the business sector, the idea being that if business is“saved”, this will automatically benefit normal individuals and all socialgroups. And, according to this approach, if someone is left behind, it is theirown fault.. There are no left alternatives being presented, discussed or de-manded by society. Everything is in harmony with the current political andeconomic arrangement. Almost no one dares to look beyond the Czech hori-zons in the current situation.

Conclusions?

We cannot say that there is a significant difference between the crisis in theCzech Republic and in Western Europe. The roots, manifestation and impactare similar; they may be different from the temporal and quantitative per-spectives, but they are qualitatively equivalent. In any case, all of this condi-tions the potential search for a left solution of the crisis in Czech and proba-bly also generally in Eastern European conditions. Of course, it is importantcorrectly to assess the situation and its causes; however, from the politicalpoint of view it is more important to make the right decision affecting the fu-ture. An important difference is in the people. In the Czech Republic, thepopulation has absorbed different historical experience and has a lower ca-

based on business visas to carry out very simple and low-level work. Tens ofthousands of these foreigners, with the status of “sole traders”, are stuck in adistant country, in debt, with slim chances of getting out of their difficult sit-uation. All of a sudden, they cannot find work, the agencies withdraw their“helping” hand to the “foreign sole traders” and the government is helpless.It is clear that such a situation leads to higher level of xenophobia among thelocal people and entrance into illegal and criminal structures, since thesepeople are often willing to do anything. This is a threat not only for the CzechRepublic but due to the Schengen Area also for the whole European Union.

A specific role was assigned to trade unions in the past. Formally, they havetheir place in the political system, they participate in tripartite negotiations;but especially the right-wing governments and political structures see themas a relic of the past, an historically outmoded structure, or even as agents ofcommunism and socialism. Many companies believe trade unions are ver-min that ought to be exterminated. An example: One employee of a smallcompany started thinking of forming a trade-union organisation. As a pre-ventive measure, he was “assigned” a security watchdog in order to watch outfor any slip he might make during the work day. The employee worked aswarehouseman and fork-lift truck driver and anyone can imagine how thisended. Clearly, this relation to trade unions is not a Czech specificity; how-ever in other countries this practice, although regarded as possible and some-times deployed, is socially unacceptable. On the contrary, modern Czechsmall and medium-sized enterprise circles often appreciate and publiclypraise this behaviour.

In the last twenty years, with few exceptions, there have been no massivepublic demonstrations by workers. This form of expressing joint group opin-ion was successfully profaned by the previous regime. The new elites in con-trol understood very quickly that this method does not need to be revitalised.There have been almost no significant strikes either. For example, one of thebiggest events was a demonstration against the Labour Code amendment,which was to significantly reduce the rights of employees and give them thefreedom of a flexible employment relationship. The trade unions organisedapproximately 20,000 participants from the entire country. Is this a lot ofpeople? It was a huge event in the Czech context. Mass mobilisation similarto what is common in Western European countries is almost impossible toachieve. This does not mean that there will not be social conflicts and con-frontations with the government, occasionally very sharp ones. However,they will never be part of the struggle of the majority and of the defence ofemployees’ rights and interests. They will rather be conflicts of various moreor less radical groups from different parts of the political spectrum.

The EU wants to show that it cares about people by allocating part of its

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pacity to protect and enforce their rights and interests. They are more passivein political and social affairs and they are not able or do not want to expresstheir opinion and use the power of their political voice. The past transforma-tion period left the social structure atomised and fragmented and reducedsocial solidarity. The position of employees, pensioners, the unemployed anddisabled has been weakened. So far, the left has not played a major role in de-termining how things will be dealt with and who will be the key players.However, on the other hand, the right (not even the radical right), for itsparts, has also not played a major role.

There has been an intense debate about the tools, techniques and technolo-gies needed to overcome the crisis. However, the political and human dimen-sion of the crisis has not attracted the larger attention of politicians, econo-mists or the media, even though past experience shows that this has been his-torically the most significant dimension affecting all future generations. Thewhole political scene seems paralysed. But this may change soon.

To conclude we may say together with Gary Younge and The Nation: Peo-ple taking to the streets does not mean they are going in the same direction.

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record-braking satisfaction levels in response to the abolition of communismand its replacement by a new system. In July 2008 an average wage in Polandwas equal to one thousand euro. It was an 11.6 % increase over that of July2007. Wages exceeded the inflation rate by three times. It seemed that Poleswould soon stop looking for better paid job abroad.

GDP Increase in Poland in the Years 2001-2008 (based on Central Statistical Office – GUS data)

Year GDP change as compared to last year GDP value (in percent) (in billion zlotys)

2001 10 75082002 14 78112003 38 81472004 53 88372005 32 96772006 61 106022007 67 117532008 4.8 (estimated data)

Average Annual Salary in Poland in the Years 2001-2008 (based on Central Statistical Office data)

Year Salary (in zlotys)2001 2,0622002 2,1332003 2,2012004 2,2902005 2,3802006 2,4772007 2,6912008 2,944

A rise in salaries was accompanied by a decrease in unemployment. In2008, for the first time since November 1998, it dropped below 10 %. Con-struction workers, workmen and engineers of many sectors, salesmen anddrivers could choose from numerous offers. Employers who suffered frompersonnel shortages tempted potential employees by high salaries.

In a short period of time, most Poles thought of this state of affairs – ris-ing salaries and employment security – as eternal. And this conviction wasratified by analysts from top financial institutions. The social mood that re-

After years of economic upheaval in Poland, the financial crisis has hit thecountry dramatically. Alongside a rise in unemployment and decrease of

industrial output, the crisis is leading to a grotesque split into supporters ofliberal and social policy.

In June 2008, a well-known Polish journalist announced in the most im-portant opinion-making weekly Polityka: “Strong zloty, sinking dollar, lowimport duties at last give millions of Poles the opportunity to consume, anopportunity that no other living generation can even remember. Millions ofPoles, common people, rapidly entered the world of joyful consumption.” Af-ter less than four months the same author announced again: “It’s a crisis. Wecannot expect it to end in a typical periodic economic revision. It will resultin a fundamental change of mentality, civilisation, ideology and a geopoliti-cal change which already is partly discernible”.

For many months, information about the decline of US financial marketand the travails of many common American citizens evicted from their homesbecause they lost creditworthiness were observed in Poland as curiosities froma distant world that could not possibly have anything to do with their own.

Economic Upheavals

The social mood in Poland last year was the best it had ever been since thesystem transformation of 1989. Public opinion research centres registered

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companies had to sell euros to banks at an exchange rate much lower thanthe official one. Some of them, who could not meet their currency option ob-ligations declared insolvency. The losers were companies with Polish owners,while the option sellers were international financial institutions. 95 % of theagreements for currency options were concluded in July 2008 when the zlo-ty was strongest.

Polish special security services are investigating whether there was a breachof law in this respect, whereas Deputy Prime Minister, Minister of the Econ-omy, Waldemar Pawlak, who is also a leader of Polskie Stronnictwo Ludowe– PSL (Polish Peasant Party) which is entering into a coalition with Platfor-ma Obywatelska – PO (Civic Platform), declares he will nullify currency op-tions which according to him is “robbing Polish companies”.

The decline of the zloty meant a loss by the owners of farms who get areapayments (there are over 1.3 million of them) calculated on the basis of a EUrule, which is based on the exchange rate of September 30, 2008 and its val-ue was considerably lower on that date than it is today. Meanwhile the meansof agricultural production (e.g. agricultural machines, fertilisers) are to agreat extent dependent on the exchange rate of the euro.

In the first quarter of 2008, GDP rose by 6 % in relation to the previousyear’s first quarter, in the second quarter – by 5.8 %, and in the third quarterby 4.8 %. It was not before the fourth quarter that a more significant declinein the development rate was perceived as the GDP increase amounted to 2.9%. However, compared to other European Union countries this ratio was stillfavourable for the Polish economy. While GDP in the euro zone shrunk in thefourth quarter of 2008 by 1.2 %, in Poland it rose by nearly 3 %.

Change of GDP in the fourth quarter of 2008 in relation to thefourth quarter of 2007 in Poland and in selected countries fromthe euro zone (Eurostat and Central Statistical Office data)

country GDP change(in percent)

Poland 29Greece 26Austria 5Belgium -5The Netherlands -5Spain -7France -1Germany -16Portugal -21Italy -26

sulted was one of consumer optimism, and this was one of the driving forcesbehind economic development. Poles bought houses and apartments, cars,new furniture, plasma TV sets and computers. An increasing number of peo-ple decided to go for holiday abroad twice a year – in summer and winter. Inorder to finance all of it, they took out loans from banks that tried to com-pete with each other, offering money without worrying about ability to payand collateral.

Unemployment Rate in Poland in the Years 2001-2008 (Central Statistical Office data)

month and year unemployment rate (in percent)

December 2001 175December 2002 200December 2003 200December 2004 190December 2005 176December 2006 148December 2007 112December 2008 95

The decline of the zloty

The fall in the exchange rate of the zloty, noted since August, was the firstpresage of the approaching crisis. In October, the first rapid changes in theexchange rate appeared, and it was said that a speculative attack on the zlotyhad been made by foreign financial institutions (in February 2009, GoldmanSachs’s bank revealed that it reached a profit level of 7.9 % in operations withthe Polish zloty).

The zloty was still losing value against foreign currencies: the euro, dollar,Swiss franc and British pound. When in the middle of February 2009 the ex-change rate was 4.06 zloty to a euro (in July 2008 it was 3.2), Prime MinisterDonald Tusk announced that the government would begin to intervene (selleuro), if the exchange rate were to drop below five zloty to a euro. This pointhas not yet been reached.

Nevertheless, the decline of the zloty was resented by both those citizenswho took loans for buying a house or apartment in foreign currencies and byentrepreneurs. Thousands of companies concluded agreements for currencyoptions with banks when the zloty was strong, hoping to sell euros to banksat a higher rate than an official one. However, in the situation of a weak zlo-ty this currency rate appeared to be much lower than the official one, and the

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whose economy depends on one or a few companies, is similar.In January 2009 there were 160.6 thousand more unemployed people than

in December 2008, and the unemployment rate exceeded 10 % (it was10.5 %). At the same time, the crisis aggravated the division of the countryinto poorer and richer regions. In January, unemployment rates inWielkopolskie, Âlàskie and Mazowieckie voivodeships did not exceed 8 %while in Warmiƒsko-Mazurskie voivodeship it reached 18.1 % and inÂwi´tokrzyskie, Zachodniopomorskie, Kujawsko-Pomorskie, Lubuskie andPodkarpackie it was over 14 %. According to government forecasts, the un-employment rate will increase in Poland to 12.5-13.5 % this year, while in2010 it will reach a level of 14 %, which means that over two million peoplewill be unemployed. At the beginning of March “Gazeta Wyborcza” wrotethat there were people who were willing to take a job for a monthly salaryequivalent to two hundred euro.

It is not only workers from the construction and industrial sectors who arelosing jobs and also, as a result, their creditworthiness. The group affectedalso includes young, dynamic people whose career was rapidly halted by thecrisis. They are workers in banks, insurance companies, advertising agencies,representatives of company management and journalists. They belong to thegroups who are enthusiastic about capitalism and are the core of PlatformaObywatelska’s liberal electorate.

Donald Tusk, who travelled to Great Britain before the parliamentary elec-tion in 2007 and, promising them jobs, tried to convince Poles employedthere to return home after his party’s triumph, is no longer conveying thismessage to them. A lot of people returning from abroad remain unemployed.

Reactions from politicians

The draft budget for 2009, prepared by the government in June 2008, as-sumed a rise in GDP of 4.8 %. In December this was amended and the rise inGDP was changed to 3.7 % for 2009. Now Donald Tusk’s government is esti-mating this year’s growth in GDP at 1.7 %. However, it is not unlikely that itwill sink even more. A budget-act amendment should be ready by the mid-dle of the year.

As late as October, Prime Minister Donald Tusk was convinced that Polandis “an island of stability” among the other developed European countries andthe world and that there are no grounds for worry as regards the recession inthe financial markets. He admitted that rapid entry into the euro zone is thebest way of protecting Poland from the financial crisis. He set a date for this– the end of 2011.

PSL (the party mainly representing peasants who take advantage of area

The economic position of Poland is also quite good, especially when com-pared to the situation of Hungary or of the Baltic states, in the eastern regionof the EU.

Change of GDP in the fourth quarter of 2008 in relation to the fourth quarter of 2007 in Poland and other countries in the eastern part of EU (Eurostat and Central Statistical Office data)

country GDP change(in percent)

Rumania 45Bulgaria 36Poland 29Slovakia 27Czech Republic 10Lithuania -15Hungary -2Estonia -94Latvia -105

Decrease of industrial output and rise of unemployment

Since November 2008 industrial output has slumped. In November thedrop amounted to 9.2 % in relation to November 2007, in December it was4.4 % while in January 2009 the decrease was double digit and amounted to14.4 %.

Industrial output slump is an effect of decreased internal demand and al-though primarily the situation in the global market, including the euro zone,the U.S. and the Ukraine. The euro zone is the main economic partner ofPoland. Foreign exchange with Germany alone accounts for one fourth ofPoland’s total foreign exchange. GDP shrinking in the euro zone caused thedecrease of demand for Polish goods.

Krosno in the Podkarpacie region with fifty thousand residents was thefirst Polish town to be severely affected by the crisis. In the town that not solong ago was proud of its extremely low unemployment rate (4.9 %), twothousand people lost work within a few months. There was no demand forglass products, shock absorbers, furniture, airplane components and yachtsmanufactured there. Dismissed employees drastically reduced their shop-ping, they stopped going to restaurants, cafés and cinema, which leads to theloss of jobs in the service sector and to the bankruptcy of small companies.The situation in other small towns like KraÊnik, Stalowa Wola or Ostrzeszów,

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direction taken by the bigger European countries in combating the crisis, thatis to increase public debt through the issuing of securities, is the wrongchoice and that for poorer Poland it would even be fatal.

In his interview for Gazeta Wyborcza (February 13, 2009) Rostowski stated:“It’s too early to know what problems will confront those countries that areso willing to increase their deficits. Until we know those results, it would beadventurist to increase our debt. The Polish path out of the crisis is a cautiousone; it consists of building reserves and preparing for what will doubtless bea very difficult period for our economy”.

“Privatisation is a better way of acquiring financial means than running upa debt”, Rostowski claims. This year the Ministry of the Treasury wants to selloff a number of big enterprises, including those from the power sector. Ros-towski’s views are shared by Donald Tusk who has identified with the liberalwing ever since the beginning of the transformation. The Minister of Financeis also supported by Leszek Balcerowicz who is always present in the media.

The position of the neoliberals is so strong that Rostowski can publicly de-clare that he will use this opportunity to undertake “the second transforma-tion” (the first one having occurred in 1990 under Balcerowicz).

A second key figure in the Tusk government involved in anti-crisis strategyis Michal/ Boni, chairman of the Permanent Committee of the Council ofMinisters and a head of the Prime Minister’s Team of Strategic Advisers. Hehad also been an associate of Leszek Balcerowicz’s. Boni is actually responsi-ble for social policy. He played a crucial role in adopting a law in autumn2008 that deprived hundreds of people of the right to earlier pensions. Oneof his tasks is to watch over social expenditures, and also those connectedwith preserving workplaces, in order to keep them strictly with the budgetparameters. Thus these expenditures are modest. The government is ready todestine PLN 2.5 billion for employers who want to retain workplaces at theexpense of shortening working time. Moreover, in spite of the trade unions’resistance, the government insists on paying every employee half of the min-imum wage irrespective of how long he/she works: six or four hours a day.

The Tusk government’s strategy, i.e. financial discipline and privatisation,is supported by big capital. A lot of employers are decreasing salaries and cut-ting employees’ social benefit packages. The purpose of some of the dis-missals is to re-employ people under conditions more profitable for employ-ers, rather than a wish to match the number of employees to the sales ordersthe company has. Employers made good use of the recession to push morestrongly for changes in the Labour Code, introducing, among other things,so-called flexible working hours.

Another vision of combating the crisis is represented by PSL, PO’s coalitionpartner. Waldemar Pawlak is looking to broadening his party’s base. He is

payments) as well as SLD (Democratic Left Alliance), which aims at the fullestintegration of Poland into the EU, are both for rapid entry into Euroland.

Prawo i Sprawiedliwoysc – PiS (Law and Justice), the main oppositionforce led by Jarosl/aw Kaczynski, decided to play up the issue of the euro asits main argument in the crisis debate. This debate is about to divide the so-ciety into euro advocates and opponents before the June election to the Eu-ropean Parliament. PiS politicians, supported by President Lech Kaczynski, isconvinced that the non-adoption of the euro is not the cause of the Polishcrisis because the countries that adopted the euro have worse economic indi-cators than Poland does. PiS demanded a referendum on euro adoption andwarned that the new currency would cause an avalanche of price increasesworsening the living standards of Polish citizens, especially the poorest ones.

PO, admitting that the euro is not the cause of recession, claimed that notbeing in the euro zone deepens the crisis in Poland. It allows for speculatingon the zloty, creates inflation threats, impedes profitable selling of state treas-ury obligations that now have strong competitors in the form of other coun-tries’ obligations issued in the stable euro. PO associates introduction of theeuro with fuller integration into the EU, a better climate for foreign invest-ment, profits for Polish companies collaborating with Euroland, as well as thereduction of inflation and decrease of interest rates which stimulates invest-ment development. Adducing the example of Slovakia, which adopted theeuro on January 1, 2009, PO was convinced that threats of rising prices weregroundless.

As time went on, the dispute became less polarised because PiS no longerquestioned the adoption of the euro. They only insisted on delaying it (until2015 or even later), while the government was postponing possible introduc-tion of the euro until 2012 or 2013 and, moreover, agreed that it is rather theprovisions of Poland’s entrance into Euroland than the date of euro adoptionthat is important.

The government’s idea of combating recession is personified by Minister ofFinance, Jacek Rostowski (Jan Vincent-Rostowski), an economist born inLondon, who spent most of his life in Great Britain. His neoliberal views haveearned him the name, “the second Balcerowicz”. Rostowski was Leszek Bal-cerowicz’s advisor when the latter, as Deputy Prime Minister and Minister ofFinance (1989-1991) practised his so-called “shock therapy”.

Rostowski wants to keep this year’s budget deficit down to a planned levelof PLN 18.2 billion at any cost. In his opinion, Poland cannot afford a high-er deficit, especially because this year the state has to sell bonds worth PLN155 billion in order to fulfil its obligations to foreign creditors, which will beextremely difficult due to the enormous amount of securities issued by oth-er countries of the European Union. The Minister of Finance claims that the

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person Senate), but also has the sympathy of President Lech Kaczynski whois a doctor of labour law and an opponent of neoliberalism, and who is for asocial dialogue taking workers’ interests into account. In February, the Presi-dent appointed two economic advisors with similar views. One of them isRyszard Bugaj, well-known opposition activist in the time of the Polish Peo-ple’s Republic. In the 1990s Bugaj was one of the leaders of a left-wing partycalled Unia Pracy (Labour Union). He represented the party in the Sejm andwas a passionate critic of Balcerowicz.

PiS is demanding an increase in this year’s deficit from PLN 18.2 billion toPLN 25 billion. It is strongly opposed to the government’s privatisation plansand demands of the government instead that it concentrate on protectingworkplaces and assisting people suffering from the recession rather than fo-cus on budget discipline. PiS was opposed (as was the SLD) to cutting theMinistry of National Defence budget for the purchase of new equipmentproduced in Polish factories. On March 6, when thousands of trade unionmembers from armament industry factories were protesting in Warsaw infront of Sejm and Chancellery of the Prime Minister, an official from thePresident’s National Security Office welcomed the delegation of trade unionmembers and expressed support for their action.

Although the crisis in Poland is only gaining momentum, it is visible thatthe political scene is dividing into two blocs: liberal and social. The liberalPlatforma Obywatelska is still in the lead. According to the results of polls ithas the support of 45-50 % of citizens. The PiS’s support is 25 %, SLD – 8 %whereas PSL is 6 %. Support for other parties is below the 5 % electionthreshold. The proportions may change this year. Growing unemployment,fear of job loss and problems with finding work, as well as a slow down inwage growth and the high costs of living – all these are factors unfavourableto the government, especially for PO. On March 1st in the presidential elec-tions in Olsztyn, the capital of high unemployment in Warminsko-Mazurskie voivodship, the PSL candidate defeated the PO representative de-spite Prime Minister Tusk’s support.

Weakening support for PO will probably be accompanied by a restorationof PiS influence. This party has ceased focusing on anti-communist slogansand is concentrating on economic problems. A further strengthening of PSLindependence within the government coalition as a moderate party posi-tioned in the political centre might also occur. PSL may take the place of SLDas a third political power.

Being ideologically adrift, SLD is not able to play a the role of the main op-position group demanding jobs, protection for the poorest and social justice.The social demands of this party were taken over to a great extent by theKaczynski brothers. On the other hand, there is no left-wing party that could

very familiar with Poland’s industrial environment and uses his position asDeputy Prime Minister and Minister of the Economy to make himself intoPolish industry’s principal spokesperson. Pawlak argues with Rostowski inthat he does not focus on financial discipline but on looking for ways to re-vive the economy. It is Pawlak who prepared the anti-crisis plan for stabilityand development presented by Donald Tusk at the end of 2008. His plan pro-vides for funding the Polish economy with PLN 91.3 billion in the years2009-2010. The plan assumes higher guarantees for loans granted to smalland medium companies – the total amount of aid, including loan guarantees,is equal to approximately PLN 60 billion. Moreover, the anti-crisis plan pro-vides, among other things, for speeding up investments realised from EUfunds (approximately PLN 20 billion) and for investments in renewable pow-er resources (PLN 1.5 billion).

Pawlak was the first to have the idea of the state paying off some part of themortgage loans taken out by people who have lost their jobs through no faultof their own. This was then seized on by Donald Tusk as his own idea, sincehe believed that the beneficiaries of this policy would be the keenest support-ers of Platforma Obywatelska.

Pawlak’s proposal of invalidating currency options is so far the most dar-ing act of state interference into the economy. Minister Rostowski firmly op-poses it. The Minister of Labour and Social Policy, Jolanta Fedak from PSL,who represents a more pro-worker outlook and seeks good contacts with thetrade unions, could replace Boni in the government.

The opposition – Prawo i Sprawiedliwoysc and Sojusz Lewicy Demokraty-cznej – supported by the trade unions (including „Solidarity” which has linksto the right wing and also to the All-Poland Alliance of Trade Unions whichhas leftist tendencies) accuse Rostowski of cooling down the economythrough decreasing internal demand. They accuse him of behaving like Bal-cerowicz who in 1997 was appointed Deputy Prime Minister and Minister ofFinance in the government of Jerzy Buzek. They also emphasise that the Tuskgovernment concentrates on cuts, savings and belt-tightening while othercountries look for ways to revive their economies.

Liberal versus social policy

The line of dispute around the euro is moving toward a split between sup-porters of liberal and social policy. The latter is mainly represented by theright-wing conservative PiS, because SLD, due to long-standing disputeswithin the party, is not able to work out its own coherent anti-crisis strategy.

PiS not only has a large group of representatives in the Parliament (156Members of Parliament in the 460-person Sejm and 38 Senators in the 100-

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replace SLD. If the crisis in Poland becomes more severe it is more probablethat a new national-Catholic party may emerge instead of a new social left-wing party. It is also possible that a completely new political force may ap-pear that could come together during social protests if the economic situa-tion is very bad (like Andrzej Lepper’s Samoobrona in the 1990s).

For now, the situation in Poland seems to be more stable than the zloty. Noparty represented in the Polish Parliament, not even the biggest trade unions,are interested in disturbing stability. The demands that are made are moder-ate in character. The temperature of the dispute is lower than it was duringthe electoral campaigns of 2005 and 2007. The ruling political and socialforces understand that an attempt at destabilisation will not profit them, as itdid western financial institutions due to the attack on Polish zloty. On thecontrary, it may turn against them.

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Agrarian Neocolonialism:Feeding People

Will be One of the Great Battles of the 21st Century

John Neelson

Dreyfus Commodities Bioenergia (LDCB), intends to extend the cultivationof sugar cane throughout the country for the production of ethanol.

In the race between governments and speculators to buy up fertile land allover the planet, governments – motivated by geopolitical concerns – are win-ning, particularly those countries sitting on important reserves of currencyor petrodollars. Thus, for example, South Korea, the world’s number onepurchaser of land, can count on control of 2.3 million hectares of agricultur-al land abroad (equivalent to the surface of a country like Israel, El Salvadoror Albania); China holds two million hectares; Saudi Arabia, 1.61 million; theUnited Arab Emirates, 1.28 million; Japan, 324,000, and so on. In all, nearlyeight million hectares of agricultural land recently have been bought orleased by governments outside their national territories.

Whole regions in under-populated countries, where governments haveagreed to give up part of their national sovereignty, have fallen under thecontrol of foreign powers. This is a worrisome phenomenon. In an alarmingreport, Grain, the NGO, denounced a “land-grab on a global scale2.”

Almost entirely without arable land and unsalted water, the countries ofthe Gulf were the first to line up for the land race. Kuwait, Qatar, the UnitedArab Emirates (UAE) and Saudi Arabia seek out rural property all over theworld.“We have the money, they have the land,” authorities in these countriesexplain. The UAE already controls 900,000 hectares in Pakistan and is nego-tiating to acquire several hundred million more in Ukraine. Benladen, theSaudi group, has bought land in Indonesia to grow rice. Libya has obtainedsome 250,000 hectares in Ukraine in exchange for oil and gas. Investors fromAbu Dhabi and Qatar have bought tens of thousands of hectares in Pakistan.Jordan will produce foodstuffs in Sudan. Egypt has moved to control 850,000hectares in Uganda to grow wheat and corn.

The most compulsive buyer, nevertheless, is China which must feed 1.4 bil-lion people, or 22 % of the world’s population, with only 7 % of the fertileland on the planet. The situation is all the more fragile because the brutal in-dustrialisation and urbanisation of the last decades already have destroyedabout eight million hectares of agricultural land and because certain regions,suffering from climate change, are undergoing progressive desertification.

“Land for agricultural production is less and less available and it is moreand more difficult to increase yields,” acknowledges Nie Zhenbang, head ofthe Central Service of Cereal Supply3. This is why Peking has made sure tocontrol vast rural properties in Australia, Kazakhstan, Laos, Mexico, Brazil,Surinam and, most of all, in Africa. China has signed about 30 agreementswith as many governments that have ceded land. Sometimes, the Peking au-thorities send their own labour, badly paid and recruited on the basis of pre-carious work contracts with no benefits.

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Many countries, importers of foodstuffs, have been affected lately by thefood crisis and the rise in prices. While rich nations have been able

more or less to cope, they have been particularly concerned by the protec-tionist attitudes of producing nations, which, starting in Spring 2008 haveadopted measures to limit food exports. Since then, countries without greatagricultural resources and water but with important monetary reserves andrapidly growing populations have decided to assure harvests by buying uplarge tracts of rural land abroad. At the same time, agricultural land aroundthe world has attracted investors for purposes of speculation. They are con-vinced that food will be the “black gold” of tomorrow. And they calculatethat, from now until 2050, the production of food will have to double in or-der to meet world demand.

“Buy land!” and “Invest in farms!” says Jim Rogers, the American com-modities guru1. George Soros, another great speculator, also is betting onbio-fuel and has acquired vast properties in Argentina. Black Earth Farming,the Swedish group, has taken control of some 330,000 hectares of land inRussia, while Renaissance Capital, the Russian hedge fund, has bought up anequivalent amount of land in Ukraine, where Landkom, the British groupalso has acquired more than 100,000 hectares of wheat-growing land. For itspart, Morgan Stanley, the US investment bank, has acquired tens of thou-sands of hectares in Brazil, a country where Louis Dreyfus, the French agro-industrial group, already well established through its local affiliate, Louis

Agrarian Neocolonialism:Feeding People Will be One of the Great Battles of the 21st Century

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Notes

1) See Rogers, Jim (2004): Hot Commodities: How Anyone Can Invest Profitably in theWorld’s Best Market. Random House2) www.grain.org/m/?id=2133) China Daily. Peking. 9 May, 20084) Le Nouvel Observateur. Paris. 23 November, 20085) Le Monde. Paris. 23 November, 20086) Raharimanana, Jean-Luc: Reasons for the wrath against the President of Madagascar.Rue 89 (www.rue89.com). Paris

For its part, South Korea already controls more arable land abroad than thesum total of fertile land within its borders. In November 2008, the Koreangroup Daewoo signed a scandalous and spectacular agreement with the gov-ernment of Marc Ravalomanana – ex-head of Tiko, an economic empire inthe agribusiness sector, who became President of Madagascar – to lease 1.3million hectares or half the arable land on the big island.

South Korean authorities have bought 21,000 hectares of land in Argenti-na in order to raise cattle. About 10 % of the land in this Latin Americancountry – that is, some 270,000 square kilometres (the size of the UnitedKingdom or Italy) – is the property of foreign investors. The largest rurallandowner in Argentina is Benetton, the Italian ready-to-wear giant, whichowns about 900,000 hectares and has become the leading private producer ofwool in the world. Douglas Tompkins, the American billionaire, also hasbought land in Argentina: 200,000 hectares not far from the largest sourcesof water in the country.

Generally speaking, the surrendering of land to foreign states is achieved bythe expropriation of small farmers and by an increase in the price of landwhich makes it impossible for landless rural workers to acquire. Not to speakof deforestation. One hectare of forest produces a profit of four to five thou-sand euros a year if it is cleared and planted with palms that produce oil; thatis, ten to fifteen times more than if the land were worked for timber4. This isone of the reasons why the forests of the Amazon, the Congo basin and Bor-neo are disappearing so fast.

The take-over of fertile land in poor countries represents a detestable returnto colonial practices. And it is a ticking time bomb5. The inclination of foreignstates is to pillage resources over the short term. But resistance is being organ-ised. Thus, last January, in Madagascar, President Marc Ravalomanana was ac-cused of giving away the country to foreign companies; his plan to lease arableland to the Korean Daewoo has been loudly denounced. “For the people ofMadagascar, for whom this land is the ‘land of our ancestors’, this surrender tothe Koreans is an irreversible betrayal of a sacred trust, all the more so becauseRavalomanana has hidden the whole affair from the people6.” The big islandhas caught fire. Riots have caused 68 deaths. In Pakistan, peasants have begunto mobilise against the forced displacement of villages in the Punjab becauseof land purchases by Qatar. Paraguay has passed a law that now forbids thesale of land to foreigners. Uruguay is considering doing the same and Brazilis getting ready to modify its legislation to follow suit.

Agrarian neocolonialism multiplies the risk of impoverishing peasants, ofpushing social tensions to extremes and of causing civil violence. The land isa very sore point that always has provoked passions. Tampering with such asymbol could end very badly.

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The Dangers andOpportunities

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tion of social movements, penalisation of solidarity; the use of terrorism,law-and-order ideology and racist, Islamophobic and nationalist agitationfor political ends; and the exploitation of scapegoats, migrants, and the Ro-mani. In some regions, this evolution will move toward authoritarian and re-pressive regimes, and even toward fascistic populisms.

Another way out of the crisis targets countries that will be marginalisedand ruined. The risks of war are also a classic outcome of great crises. Let usnot forget that the world is already at war and that nearly one billion peoplelive in regions in war. Conflicts are permanent and destabilisation systemat-ic. The forms of war have changed along with the militarisation of societies,global apartheid, the war of the strong against the weak and torture havingbecome commonplace.

To fight against these dangers, we will have to strengthen the various resist-ances and expand alliances and coalitions for freedom, democracy and peace.

The opportunities of the global crisis

The dangers are known; the available opportunities less so. Yet, as Hölder-lin said, as quoted by Edgar Morin, “Where danger grows, so does that whichsaves”. Let us remember six opportunities made available by the crisis. First,the ideological defeat of neoliberalism furthers the rise of public regulation.Next, redistribution of wealth and the return of the domestic market makepossible again the stabilisation and guarantee of incomes, social protectionand redeployment of public services. Likewise, the ecological emergency re-quires a transformation in the mode of social development. Along the samelines, the crisis in the political model of representation reinforces the neces-sity for social and participatory democracy, and also for a new reflection onpower. Furthermore, the rebalance between the North and the South is open-ing up a new phase of decolonisation and new world geopolitics. It is accom-panied by new urbanisation and migrations that are the new forms of popu-lating the planet. Finally, a system of global regulation makes it possible tothink through and regulate social transformation at the global level andopens up the perspective of global citizenship. The alter-globalist movementoffers these opportunities.

However, none of these opportunities will impose themselves; they will beable to lead toward better situations only if resistance expands and if the so-cial and ecological struggles and struggles for freedom and against war be-come sharper. All the more so as the crisis is also opening up opportunitiesfor the managing elites who will be divided between those who lean towardrenewed forms of oppression and those who will swing towards radical re-form of capitalism. This radical reform is not inevitable, but it is not impos-

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The alter-globalist movement is faced with the crisis of globalisation,which can be characterised as a crisis of capitalist globalisation in its ne-

oliberal phase. This crisis is not a surprise for the movement; it was foreseenand announced long ago. Several analyses put forward the hypothesis of anopen crisis of globalisation. Now we’re in it! This is a structural crisis: eco-nomic and social, ecological, geopolitical, political and ideological. The cur-rent sequence of financial, monetary, real-estate, food and economic crisesare many examples of it.

The dangers of the globalisation crisis

The old and venerable Chinese ideograms that represent “crisis” associatetwo, contradictory characters, as is proper for all good dialectics: that of“dangers” and that of “opportunities”.

The first, danger, concerns poverty. The exit to the crisis being sought con-sists of making the poor pay for the crisis, starting with the discriminated andthe colonised. It also consists of thinning out the middle classes. And, as ifthat were not enough, even certain categories of the rich are made to pay.From this, sharp contradictions can be predicted.

To effect make such policies, there will need to be repression, criminalisa-

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The Dangers and Opportunities of the Global Crises

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The alter-globalist movement must take action today on three levels. In theshort term, it must resist and reinforce resistance against dangers. In themedium term, it must have influence – influence on the strategies of the re-formers. In the long-term, it must transform – transform in order to go be-yond capitalism. For each opportunity, it is important first of all to indicatewhat the crisis highlights and what must be fought against to prevent preser-vation of the system and the dangers it harbours. It is then important to iden-tify the emerging proposals envisioned by the reformers, which must be rad-icalised. Next there must be an outline of what is coming to the surface, so asto indicate the terms of, and possible ideas for, radical transformation.

Public and citizen regulation

The rise in power of public regulation will finish off the ideological defeatof neoliberalism. This collapse in ideology splits the neoliberal hegemonicbloc and announces a new phase of globalisation. Neoliberalism is still dom-inant, but it will be difficult for it to get back on its feet again. Nevertheless,it is essential to continue to take into account neoliberal rationality. On theone hand, neoliberal social forces are still powerful and are very likely to bepart of the ruling blocs and to heavily influence the dominant policies. Onthe other, even if another system asserts itself, the social relations of neolib-eralism will remain at work, even if transformed and subordinated, in theeconomic, social, ideological and political ways of thinking.

Three major questions - that of the state, of the global market and forms ofproperty - fall within the perspective of a possible transcendence of capital-ism and are already being addressed by the movements. The question of thestate is present in several ways. First of all, the realisation of the contradicto-ry nature of the state, both protector and oppressor, both bearer of the gen-eral interest and defender of privileges. Democratisation and citizen controlof the state, as well as the relationship to what we, to simplify, call “civil soci-ety”, are at the centre of the reality of the democratic nature of societies. Thenature of public policies is being called into question right now. Discussionof nationalisation will be one of the important stages of this questioning. Theissue of the global market poses the need for an alternative to free market ex-change. The emergence of major regions as a political, economic, financialand cultural space is opening real perspectives. It also implies a new concep-tion of currency. The question of relations of property and their transforma-tion is fundamental: land ownership at the core of agriculture, and control ofurbanisation. Land ownership is still at the heart of the colonial reasoningstill present in many situations. The legal and social relations of property de-termine the plurality of forms of production. This issue plays a role in dis-

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sible. It will be credible only when all the paths enabling the elites to conservethe current forms of power turn out to be insufficient. Capitalism has shown,in particular after the 1929 crisis, along with the New Deal made explicit byRoosevelt, its capacity to “revolutionise” its social relationships. It is still cap-italism. As in Visconti’s film “The Leopard”: “Everything must change forthings to remain the same.”

The alter-globalist movement will be challenged by attempts at radical re-form, all the more challenging since, for the lower classes, the question ofsteps leading out of the initial, severe phase of crisis is urgent. Likewise, in themedium term there is no equivalence between a conservative tendency andreform tendency. The questions remain unanswered as to the capacity ofthese reforms to deal with the crisis and their insufficiency vis-à-vis trueemancipation. Further, assessments of these questions will differ in themovement. The position to take vis-à-vis the political forces tempted by thesereforms, which we will call in an oversimplified way a “Green New-Deal”, willremain to be worked out according to the context and to various situationsin different countries and in the major regions. Two questions have alreadybeen asked: How can we avoid an alliance between the neoliberal/conserva-tive forces, on the one hand, and the reformers, on the other, based on min-imal reforms and on green and authoritarian regimes? How can possible re-form movements be radicalised to the benefit of the lower classes?

The alter-globalist movement is not refusing the possible improvementsresulting from these reforms and is not hesitating to accept measures that willameliorate intolerable situations. At the same time, most of its activists areinterested in radical transformation and take very seriously the possibilitiesopened up by the crisis of going beyond capitalism. This going beyond capi-talism is seen as a long-term possibility, one that is not predetermined. Incurrent society, there are already social relations that foreshadow it, like thecapitalist social relations that emerged within feudal societies. These are notnew, finished relations; these are attempts at transcendence that emergewithin social practices but are not completely free from the dominant rela-tions. The rupture does not occur with the elimination of the former socialrelations, but coincides with thepoint at which new relations become domi-nant, subordinate the former social relations and profoundly transformthem. The new world born within the old is built progressively; it starts fromcontradictions experienced and generates new ones. The alter-globalistmovement is a bearer of these new relations through resistance and innova-tive social practices. The social forums are the spaces of experimentation andfor making the new visible. They also facilitate the critical intellectual workthat makes it possible to differentiate that which can consolidate the repro-duction of capitalist relations from that which heralds new perspectives.

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mentioned several times at the United Nations, is that each person in theworld must have an income higher than the poverty level. This is calculatedcountry by country: it is half of the median income, i.e. that which separatesthe population into two halves, one earning more than the median revenueand the other less. This measure has great virtue; it sets a lower limit to thecollapse of real economies. To carry this out, taxation, which must also be in-ternational, is necessary to enable its financing. The question of an upperlimit of income must also be dealt with. The discussion is an old one. Today,it does not address so much the scale of inequalities as it does the principleof limits. The global minimum income, and the upper level of income, are aresponse to the global crisis.

The mobilisation of the movements will put all its weight behind the im-portance and nature of redistribution of wealth and the forms and methodsof this redistribution. More radically, two major questions are already beingput forward, that of the value of work and that of access to rights. First of all,the value of work, starting with the recognition of the value that work repre-sents and challenging the reality and supremacy of a profit value. To do so,incomes must be connected to the prices of the products of primary labourmore than to the fluctuations of the speculative labour markets.

Access to rights for all is proposed as a strategic axis. What differentiates themore radical approach from the Keynesian one is the stess on equal access torights in a context that defines the minimal rights that make up a social net.

The ecological and social emergency

The climate emergency and the exhaustion of resources makes a form ofdevelopment based on productivism and waste impossible. The ecologicalemergency imposes a rupture, a transformation of societies that combinesthe social and ecological aspects along with peace and freedoms. It is a proj-ect for the future that cannot be summed up as concrete utopia.

We have now gone beyond the stage of mere awareness of the ecologicalemergency. It is no longer a matter of simply realising the limits of the cur-rent form of development and importance of redefining it. The political dis-cussion deals with the nature of the model to be promoted. The proliferationof environment industries and of productive processes without waste willprobably be insufficient. The two discussions focus on the sharing of wealthbetween the social classes and societies, and the compatibility between eco-logical emergency, social emergency and freedoms.

The ecological emergency can facilitate a more radical approach. It con-firms the necessity of redefining incomes and of international taxation. It en-courages the approach via the Common Good and Public Property. Further,

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cussions of the kind of economy that can be called social, not-for-profit, sol-idarity-based or local, as well as discussions of nationalisation, of state own-ership, socialisation and democratic management, and also of the forms ofcollective ownership, that of the stakeholders, the employees, the users andcustomers, the subcontractors and suppliers, the stockholders and the localinstitutions.

Redistribution of wealth and income

The redistribution of wealth, necessary in view of the rationale of neolib-eralism and its excesses, leads to the temptations of neo-Keynesian econom-ics. It confirms the tendency to rehabilitate the domestic market, at the levelof major regions rather than at the national level. It could lead to the reha-bilitation of social protection systems and relative wage stability. The incomelevels and their progression would allow popular consumption to have a roleonce again as a motor of growth that could confront the over-indebtednessthat set off the subprime crisis. Universal access to rights, of which the Mil-lennium Development Goals (MDGs) are a pale substitute, would be re-stored. It would make possible the redeployment of public services, alongwith significant involvement by local institutions and a strong not-for-profitassociation-component.

There are two conditions for this project and the hypothesis on which it isbased, conditions that distinguish it from a simple return to the pre-neolib-eral Keynesian model. The first condition is the need to respond to ecologi-cal limitations that make an extension of productivism dangerous. The con-tradiction between ecology and social sector has become decisive; it is essen-tial to overcome it. The second condition is the need for regulation at theglobal level compared to the national regulation rounded out by the BrettonWoods system of the 1960s.

At the heart of the crisis, there are the inequalities, poverty and the variousdiscriminations. The draining of the lower and middle classes has reachedsuch a level that it has wound up endangering the system as a whole. Redis-tribution of wealth involves an evolution toward greater social justice. It ismore a matter of valuing the incomes generated by work than of distributingcompensations. And, as the crisis is global, the response is that of a minimumincome at the global level. Proposals exist. Peasant-farmer minimum incomeis one of the components, as we have been able to see in India. There, twoyears after the Mumbai Social Forum, a not-yet applied law was passed: aguarantee for each Indian peasant-farmer to have 100 days of work paid peryear! In all the economies, the minimum salary in industry and services willhave to be structurally valued and guaranteed. The proposal, which has been

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ship of residence. It will modify the representation of social change that to-day rests exclusively with two social actors: businesses and the state, the lat-ter reduced to administrations. The relationship between economic powerand political power that gives its meaning to the forms of democracy willhave to take into account the active presence of citizens and local powers.

A more radical approach will have to leave plenty of room for the culturaldimension. It will give legitimacy to multiple identities that will renew the re-lationship between the individual and the collective body. It will give room todemocratic self-managed and self-organised activities. It will enable theforms of civil society, in Gramsci’s sense, to go beyond the sole reference tocounter-powers in order to expand citizen control and to build spaces of peo-ple’s autonomy. This approach will make it possible to give a foundation tofreedoms by linking rights and responsibilities, as rights start with the respectof the rights of others.

A new phase of decolonisation

The rebalance between North and South opens up a new phase of de-colonisation and new geopolitics. It could close the phase that went from1979 to 2008 by regaining control via the management of the debt crisis, thecontrol of raw materials and military interventions, establishing new termsof internatioanl exchange. Between 30 and 50 emerging countries, includingthe three most representative, i.e. Brazil, India and China, can now defendtheir point of view and their interests. It is not a question of a multipolarworld, but a new international geopolitical system. There could be consider-able consequences, especially for the terms of international exchange and forthe nature of immigration.

There are two conditions for this evolution, which will not be establishedwithout upheavals. The first condition is that the emerging countries be ca-pable of changing their model of growth, by giving priority to the domesticmarket and to consumption by the lower and middle classes over exports.This disconnection is possible. The second condition is that the emergingcountries build forms of unity between the Southern countries. The firstphase of decolonisation failed in great part when the oil countries, after the1977 shock, allowed the emergence of divisions among the Southern coun-tries, allowing the G7, backed by the IMF and the World Bank, to imposestructural adjustment.

The social and citizen movement can, in this stage, put forward several pro-posals. These are, among others, debt cancellation, the stabilisation of rawmaterial prices, food sovereignty and the respect of immigrants’ rights. Froma geopolitical point of view, this evolution will correspond to a double trans-

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it leads to a redefining of wealth, its production and its sharing. In order toreduce productivist growth while still meeting fundamental needs, the natureof these needs must be changed. The evolution of individual and collectivebehaviours is required, but moralising in the direction of voluntary simplic-ity and conservancy are not enough. Several ideas can be considered. Themost important is that of the cancellation of mercantile categories, “demer-cantilisation”. This tendency, especially in the public services of educationand health care, had made advances in the 1945-1980 period. Neoliberalismfought it constantly, especially by privatisations and the sanctification of thecapitalist market. Other ideas are possible. The meeting of fundamentalneeds, reinforced by the equal access to rights for all, has to benefit from a re-duction of military and arms expenditures. It would benefit from a reductionof the labour time resulting from a reorientation of productivity and the re-definition of production. It would be facilitated by a policy of economisingon transportation, corresponding to the search for localisation and relocali-sation, according to the economic access to resources and consumption,without taking low labour remuneration as the sole adjustment value.

The models and representations of freedoms

The crisis of models of representation and power is one of the dimensionsof the global crisis. The calling into question of freedoms is one of the maindangers stemming from the crisis. A “Green New-Deal” is not in itself a guar-antee of freedoms and democracy. There can be state regulation and publicinterventions that in no way promote freedoms. Furthermore, the ecologicalemergency can act to justify authoritarian excesses. It is the mobilisation ofsocial and citizen movements that will determine the evolution in the medi-um term in the various countries and at the global level.

Among the opportunities, several concern the models of representation.The reconstruction of social ties could find new opportunities to challengethe legal and formal aspects of democracy imposed from above. The formsrelationship between participatory democracy – whose strength is based ondirect democracy – and representative democracy – which is very often car-ried out by proxies and “notables” – should progress and become diversified.The access to individual and collective rights for all should establish a socialdemocracy without which political democracy would lose much of its mean-ing. Institutional and electoral systems could, and ought to, become moredifficult to be seen as independent of social conditions.

The strategic alliance between the local communities and the movementsof associations will be the foundation of the relationship between local pop-ulations and local communities and will give greater legitimacy to a citizen-

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To go further in defining a strategy, let us propose a guideline organisedaround two necessities: a new constitution of the world based on globaldemocracy; a global social contract founded on the respect and guarantee ofrights that are as much civil and political as economic, social and cultural.Today the evolution of international law is, from the angle of this guideline,the strategic point of confrontations. International law can be based only onthe Universal Declaration of Human Rights and the United Nations Charter.It’s the fixed point around which to build the system of international rela-tions, the fulcrum that gives the United Nations its legitimacy in the globalsystem.

The indispensable global regulation will require an overhaul of the systemof international relations, based on radical reform of the United Nations andprogression of international law founded on the implementation of the Uni-versal Declaration of Human Rights and that rejects the subordination of in-dividual and collective rights to commercial law and business law. This glob-al regulation could make the reality of global citizenship progress.

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formation: the reinforcement of one of the counter-tendencies of globalisa-tion in its current form, that of major self-reliant regions; and that of goingbeyond the contradiction between the North and the South in the buildingof a balanced international system and of global public regulation.

Global public regulation

The failure of the international institutions of globalisation is patently ob-vious. The WTO was to have rounded out the Bretton Woods system andNATO to have absorbed all military alliances. This project in the end couldnot succeed. Regulation via the global capital market foundered in the crisisof neoliberalism, highlighting the importance of global public regulation.

Looking for alternatives for the transformation of each society implies an-other international system. Wars linked to control of resources and territo-ries are still current events; the identity dimension of conflicts is becomingmore pronounced, combining spatial segregation and so-called “ethnic” pu-rification. The dialectic of network terrorisms and state terrorisms is makingcivil and political rights regress in the name of a “shock of civilisations” thatjustifies the doctrine of preventive war, “lawlessness” and torture. The strate-gy of wars by the strong against the weak is combined with the surprise ofdiscovering the ability of the weak to locate the vulnerable points of thestrong.

Backed by the struggles for democratisation, a reform of the internationalsystem can be proposed. It includes: the democratisation of the functioningof the institutions that must implement international regulation; the settingup of effective arbitration and recourse bodies; an international system ofcomplaints that can be submitted by citizens associations; priority in the in-ternational system to the fight against impunity; effective integration of in-ternational financial and trade institutions, IMF, World Bank, InternationalFinance Corporation and WTO into the direct system of the United Nations;a new architecture, which could be based on regional cooperation groups,and a system of regional representation at the global level; and obligation forthe international agreements and treaties of all the international institutionsto respect the Universal Declaration of Human Rights.

A new system to be defined must take into account three essential dimen-sions: the building of peace and the settling of conflicts; the reduction of eco-logical risks; and the system of international relations that further the trans-formation of societies along the lines of freedom, equality and solidarity. Theapproach through rights and through equality of access to rights lays out theperspective of global social contract. It renews the conception of social trans-formation.

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World Social Forum

On the streets of Belém one can find push carts attached to skinny donkeysor even men carrying fruit, tyres, cardboard boxes or crates with empty bot-tles. At night, many streets are taken over by female, male and transgenderprostitutes and the taxis avoid stopping at red lights. People’s bellies areswollen because of malnutrition, surviving on a diet based on plenty of rice,pasta, beans and cassava flour.

For European standards, even for those of Portugal, fried (and quite fresh)fish, assorted wonderful fruits, or even the typical and absolutely deliciousduck in Tupuci sauce, are rather cheap. Despite their poverty, the people ofBelém express their happiness at having so many visitors in town, regardlessof the obvious communication difficulties.

In Belém, the docks are the heart of the city’s social life: cargo-boats carry-ing containers, tourists on bay cruises, trendy and brand new bars and restau-rants, just like in any converted dock area in Europe, side by side with cheaplocal bars serving markets such as the municipal market and “Ver o Peso”,where the Amazon delicacies which flavour local dishes can be found, as wellas fruit, dried fish, shrimp and, everywhere, flies.

100,000 march at the opening of the World Social Forum

The opening march of this year’s Word Social Forum began at the docks,the gathering place for the 100,000 visitors lodged in a city where nature of-ten calls the shots: the march was due to begin at 3:30, precisely the timewhen the rain, fierce and tropical, starts, always at the same time. In the end,the march started an hour later, when the rain was gone.

The hundred thousand participants in the WSF who crossed the city ofBelém stopped the traffic and brought the locals to their windows. The hugepolice deployment was intimidating enough, but it did nothing other thanwatch an extraordinary march celebrating all the social demands of planetEarth, to the sound of solidarity activism and the joy of the will to transformsociety.

More than 1,200 native Indians coming from the nine countries located inthe Amazon Bay gave the party a distinct flavour and demanded that theirrights be respected: the right to health, to the ecosystem, to their thousand-year-old culture, which learns from the present and also wants to have some-thing to say about the future.

All agendas came together in this Forum: the struggle against slave labourin poor countries or against job insecurity in the developed world; standingup for education and public health services; saleswomen’s emancipationmovements; the right to abortion; the struggle against human trafficking inall its dimensions; the defence of indigenous cultures and traditional know-

This year the World Social Forum moved to Belém, at the edge of theAmazon Rain Forest. More than 100,000 people participated and attend-

ed more than 2,000 panels and discussion seminars. Almost a thousand jour-nalists from all over the world were present as well.

Everything is overwhelming in this city: participants are staying in boatsand private homes, in conditions far below what they imagined when theybooked their accommodation months ago, thousands of kilometres away.Young people who have opted for camping sites must face the pouring rain,which comes in the short but torrential spells typical of tropical areas. TheTransform delegation, of which I am a member, is lodged in the comfortableabode of a religious order active in popular education, about fifty kilometresaway from the city.

Locals say the city looks different this week: security was clearly increasedand the places where the Forum is being held, as well as the city centre andthe main access routes, are under surveillance. Road blocks for cars and evenbuses are common, so that the passengers can be searched. The universitieswhere most of the WSF is taking place are on the outskirts of Belém, in anarea consisting of poor and substandard housing, where insecurity and po-lice patrols usually go hand in hand. It is rather uncommon to meet anyonewho speaks English or French in shops and restaurants, at a time when thetown is full of people from all over the world. Every time I take a picture, eveninside a public bus, someone reminds me how dangerous it is to display acamera in public.

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Amazon Rainforest is structured around these resources, but they are in-creasingly falling prey to private appropriation, supported by the complexmechanisms protecting intellectual and industrial property, in the hands oflarge corporations and miles away from the lives of indigenous peoples.

One activist from the Ecuadorian Amazon summed up the problem of thiskind of usurpation in a debate on bio-piracy: “we cannot understand howsomething we have used for generations suddenly becomes private propertyand we can no longer use it”. Indeed, large corporations, mostly from theUSA, have been granted patents on the use of thousands of Amazonianplants. The products thus obtained are massively sold without benefit to thepeoples who really developed their use.

Close to Belém do Pará, Icoaraci city is known as the centre of the craftproduction of traditional Amazonian pottery. It is a city in the depths of ut-ter misery, with substandard housing, built on concrete and wood structures,where painting is seldom seen and the sewers flow openly on the smellystreets. Basic sanitation is available to only about 10 % of houses in Belémand it gets much worse in the remaining areas of the Pará state. The WorldSocial Forum is taking place in one of the poorest areas on Earth.

Five presidents at the WSF

Lula was not there to play host, but four Latin American presidents joinedtheir voices in a rally in Belém do Pará, outside the Word Social Forum. Theyasserted the importance of the WSF’s contribution to the socialist struggleand asked for the support of social movements all over the world. Unin-formed rumours preceding the meeting, regarding the time and location ofthe event, which took place under heavy police and army presence, prevent-ed a mass audience, and only a few hundred of the 100,000 Forum partici-pants were there.

Rafael Correa spoke first, and in twenty minutes he put forward a revolu-tionary programme. The Ecuadorian president began by criticising the arro-gance behind the “Washington consensus”, shared by only a minority of lead-ers, and highlighted the “magic moment” taking place in Latin American pol-itics – ten years ago no one could foresee that new left-wing governmentswould be elected expressing the will of the people and the results of the so-cial movements’ struggle. An economist, who graduated from the Universityof Chicago, the main theoretical reference for neoliberalism in the pastdecades, the “Chicago Boy who re-wrote the lesson”, as Chavez would latersay, defended a new definition of the role of the state and the need to rethinkthe idea of planning, for today “those who plan the most are the rich coun-tries and the large multinational corporations”.

ledge; the belief in a solidaristic economy as an alternative to capitalism; thestruggle against child labour … fighting for human dignity in all its dimen-sions is the shared motto of everybody in this Forum, where all the socialmovements’ ambitions for transformation meet.

When the march came to an end, in a huge rally at Praça do Operário, thecity was brought to a standstill. The visitors slowly went back to the docks. Inmany squares, downtown stages were built for the cultural events which wereto cheer up Belém that week. The Forum’s party had begun too!

Amazon Rainforest, a heritage for all

The huge march kicking off the World Social Forum was followed by morethan two thousand debate sessions that make up the programme, organisedby major thematic areas which represent the main demands of the world’ssocial movements.

The shared goals ranged from the demand for peace to fighting againstmilitarism and all types of discrimination, standing up for self-determina-tion and the rights of all peoples, or for the protection of nature and ecosys-tems, as well as upholding a democratic, emancipatory, sustainable and soli-daristic economy. Discussions on economic and social democracy were di-vided into six large areas, including freeing the world from capital’s domina-tion; wide and sustainable access to the shared property of humankind andnature; knowledge, culture and media democratisation; upholding the rightsto food, health, education, housing, employment, decent work and media;and building and spreading democratic and participatory political and eco-nomic structures and institutions.

The economic world crisis and the protection of the Amazon Rainforestwere, in the end, the two main topics discussed, in a Forum where nothingwas easy: the tropical humid heat made everybody perspire from 8:00 am on,all the access routes to the activities were jammed and it took hours to getanywhere, and poor information regarding where the debates were takingplace forces everybody into a painful merry-go-round within the Forum site.To make up for this, one could not help being charmed by Amazonian deli-cacies and daily discovered new Amazonian fruit juices.

On the first day, the debates focused mainly on the Amazon Rainforest.Protecting and valuing it is the aim of a large number of organisations, andthe protection of the ecosystem and its biodiversity is just one of their de-mands, which also include defending public services or the right to health,education and social care. The concept of socio-diversity won ground inmost debates, which tended to focus on the need to uphold traditionalknowledge and awareness of resources and how to use them. Social life in the

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demanded only that “Venezuela’s sovereignty be respected”.Venezuela’s president reminded the audience that three hundred years of

capitalism have brought about hunger, inequality, child labour and nature’sdestruction and contamination, and that these problems were only madeworse as globalised capitalism took hold. Thus he called for a new socialismas a common goal, shared with the social movements: “there’s no third way –it’s either capitalism or socialism!” Along with the other presidents, Chávezpointed out the importance of the social movements, because “a new worldis possible, a new world is needed, a new world is being born”. The longspeech – which caused a few people to leave – ended with a cry of hope:“Motherland, Socialism or Death! We shall win!”

The meeting was supported by PSOL and promoted by MST (The Land-less Movement), who did not invite Lula da Silva. However, the Brazilianpresident joined the other four at a night rally focused on the opportunity tobuild a new development model and a new society. In this rally the newmeasures against the crisis being deployed in Latin America were put for-ward; they include a major increase in public investment, namely in housingand energy, and the foundation of a regional investment bank to help growthand development.

Lula da Silva promoted a meeting with the organisations represented in theWorld Social Forum International Council. This meeting brought togetherabout 80 people in a hotel room in Belém do Pará. The president of Brazilwelcomed the forum, and said the current edition, which he found better or-ganised and attracting a wider number of people,“shows the need for its con-tinuity and its importance for democratic diversity”. Lula promised to do allin his power to render it possible for the WSF to meet in the USA (there areproblems regarding entry permits) or in the Middle East (where obvious se-curity questions are raised).

The meeting started with five short speeches, from previously chosen rep-resentatives from Kenya, France, Chile, India and Cuba, which Lula answeredquite informally. The Brazilian president highlighted the measures he imple-mented to benefit farmers: 519 thousand families were “settled” in the coun-tryside since he came to office, which corresponds to more than half of allsettlements registered in Brazilian history. He also mentioned the nationali-sation of 43 million hectares of land (an area much wider than the whole ofEngland, Italy or Germany.)

Lula also alluded to the world economic crisis, and suggested it is an “op-portunity” to rethink current consumption and development models, simi-larly to what had been said the day before in the rally with Chávez, Morales,Lugo and Correa. Besides mentioning a new regional investment bank inLatin America, the Brazilian president laid out the steps taken in the past few

Correa called for a joint effort of national powers and collective actionagainst today’s capitalism, which regards labour as a tool for capital and basescompetition on job insecurity. He defended the idea of placing new empha-sis on use value instead of exchange value, and mentioned as an example theAmazon Jungle, “the most precious of all humankind’s property”. He furtherargued that a new concept of development is needed, based on new regionalforms and new collaborative processes between different regions. Accordingto Correa, “socialism hasn’t challenged capitalism’s main objectives – massconsumption and the generation of more and more wealth – and only at-tempted to achieve them faster; therefore, socialism of the 21st Centuryshould “evolve, adapt itself to each of society’s needs, and be non-dogmaticand effective”.

Fernando Lugo, elected president of Uruguay one year ago, also pointedout that “the history of the nine World Social Forums runs parallel to a pro-found change in Latin America’s politics: the social movements’ struggleshave been the pillar of change, built on the streets, under the trees, in manystruggles and elections, with wins and losses”. “What we’ve achieved so far”,he said, “was enough to defeat neoliberalism, but it takes much more to buildthe society Latin America deserves. (…) it takes a lot of patience to sail inAmazonia, but in Latin America we can only build a new continent if we’reimpatient. A new world is not only possible, it is becoming real”, he conclu-ded.

Evo Morales didn’t need all of his twenty minutes to claim the importanceof “protecting the land”, using the Amazon Rainforest and its peoples as anexample. “I don’t want to be invited, I want to be convened”, elucidated thepresident of Bolivia, who demanded “justice and humanity instead of ambi-tion” and asked the social movements not to forget about him, because “hemight make some mistakes, but he never betrays his friends”.

Hugo Chávez was the last to speak, stressing the twenty minutes each ofthem had to speak as an instance of how socialism works. However, he spokefor almost fifty minutes, and spent most of them invoking Fidel Castro’s lega-cy and the meetings he had in the last twenty years with the Cuban leader. Hesaluted his companions and remembered Tupac Amaru, an Indian chef who,when he was about to be torn apart by four horses at the hands of Spanishcolonisers, said with dignity: “I am going, but I shall be back, turned into mil-lions of people”.

Chávez was the only one to mention the “murderer” living in the WhiteHouse these past eight years, who “left through the back door, straight to his-tory’s garbage bin”. He further challenged Barack Obama to give a sign of realchange, giving Guantanamo back to Cuba and withdrawing the USA armyfrom Ecuador. He pointed out, however, that his hopes aren’t “too high” and

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In my lecture, I put forward the current situation as a crisis of overproduc-tion of the capitalist system, whose main features are a tendency to decreasethe share of wages in the global income, which lead to an expansion in cred-it for consumption and over-indebtedness of families. This process runs par-allel to the liberalisation of the financial markets and the privatisation ofpension funds, harbouring the speculative processes that lead to the currentcrisis. On the other hand, the free movement of capital made it easy to trans-fer productive investments to places where wage protection is relatively poor,leading to global job insecurity.

Lander’s contribution and my proposals for alternatives (public invest-ment, full employment and housing policies, de-privatisation of public serv-ices and the development of a solidaristic economy and cooperative net-works) gave rise to an interesting debate, with lots of different contributions,which is only natural, given the wide range of national situations familiar tothose in the audience.

On Saturday night, the night before the end of the forum, a meeting be-tween delegates from the Party of the European Left and the São Pãulo Fo-rum, which brings together left-wing political organisations from the Amer-ican continent, took place in a hotel in Belém. At this meeting it was pointedout how urgent it is to find common ways of combating the crisis, and someprimary areas for common work were defined: they include new develop-ment models, support for the Palestinian cause, and immigration issues,which are expected to increase in importance as the crisis deepens, stimulat-ing right-wing populism.

Urgent action at the Alliances Day

The last day was Alliances Day and was devoted to extendive meetings withthe aim of finding common ground for common action. In the morningthere were partial thematic meetings, and some of the conclusions were laterannounced. In the afternoon it was time for the Assembly of Social Move-ments, and some global campaigns to be launched in 2009 were then madepublic. The Forum claims it is urgent to find alternatives to capitalism, be-cause another world is possible and necessary.

The Forum ended in the same high spirits with which it began, despite theexhaustion of most participants, considering how many kilometres had beentravelled inside the Universidade Federal do Pará (UFPA) and the Universi-dade Rural da Amazónia (UFRA), looking for rooms poorly signed and de-bates which were rescheduled again and again or moved to other locations,all in an intense and wet tropical heat.

A road was specifically built to access the two universities where the Forum

years regarding regional cooperation in the area and the importance of thesocial forums in deepening that cooperation. He asked those present to bearin mind that some countries are not in a position to face the super powers(mainly the USA) because of the funding and financial help they receive fromthem.

Lula also put forward his position on the current crisis and pledged seri-ously to increase public investment: “If in business logic one must be carefulwhen it comes to investments, with regards to social needs an increase is re-quired”. The ex-trade unionist also pointed out that in spite of the crisisBrazil did not collapse, unlike in the 1990s when it collapsed twice. He re-called that “in those days, yuppies who couldn’t even locate Brazil on a mapwere telling Brazil what to do”, and that those countries who favoured freetrade when times were better are now advocating protectionism.

The Brazilian president ended up making his first public statement abouthis succession, indicating Dilma Roussef as PT’s next presidential candidate.Besides Lula, Dilma was the only member of the cabinet to take part in themeeting, putting forward an initiative under way concerning the revising ofmedia regulation, including independent media.

The World Social Forum addresses the crisis

The international crisis was one of the main issues discussed in the WorldSocial Forum. On the last day, I was asked to give a lecture on it, together withthe Venezuelan sociologist Edgardo Lander, in a seminar sponsored by Trans-form. The name badges on each of the Forum’s participants allowed me toidentify at least fifteen different nationalities among those present in the de-bate on the international crisis and perspectives for solving it: 60 people,most of them young (from South Korea, Vietnam, India, Nepal, USA, Brazil,Venezuela, Finland, Greece, France, Germany, Switzerland, Czech Republic,Italy) crammed the tiny room and more than half had to sit on the floor.

Edgardo Lander opened the debate claiming that we are currently livingthrough the end of neoliberalism, which was the outcome of the USA’s polit-ical and military hegemony and led to an exploitation of resources thatbrought the planet close to its limits. In his view, the collapse of capitalismmight be the collapse of life itself; this being so, it is of utmost importance,he urged, to establish new means of controlling what we know about the useof such resources: economic and technological solutions that maintain cur-rent paradigms and ideas of development and consumption will only makethe crisis worse. The time has come to build a new society, one which refus-es to approach economic issues by disregarding its social and cultural conse-quences.

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democracy and multiculturalism as the ethical basis for public well being; anew societal paradigm based on a new concept of development, demandingglobal citizen-based solutions and a new balance of power in politics and so-ciety as a whole. As Walden Bello, from Focus On the Global South said, “weneed to radicalise imagination in order to bring about a better world”.

took place, but it was always jammed. It crossed the Terra Firme, one of thepoorest and most dangerous neighbourhoods in Belém do Pará, permanent-ly under army and police surveillance throughout the week. In order to avoidsuch traffic jam, participants could use small and risky boats which linkedthe two areas in 15 minutes, through the waters of River Guamá.

Despite mobility and housing problems, most of the participants werequite happy with the Forum, due to the high quality of debates and thechance to make contacts and forge networks for collective action. The Forumregarded itself as a chance to learn and act, and that is what it appears to havebeen. A common call was made: alternative models of society are urgentlyneeded – models aimed at defending the people and respecting the ecosys-tems. The global crisis was regarded by many as an opportunity: if the leftdoes not come up with ideas of how to mobilise people soon, others will.

One of the main topics debated as far as alternatives for a better society areconcerned was that of solidaristic economics: the importance of coopera-tivism, associativism and self-administration cannot be underestimated astools to strive for control of the means of production and challenge capital’shegemony. In the paper released after the assembly on this topic at the lastday of the Forum, an International Campaign for Ethical Shopping was putforward, as well as the aim of bringing about some form of articulation be-tween organisations working on media technology to bring solidaristic ex-change to greater visibility and foster increasingly closer links between eco-nomics, sustainability and finance.

At a time when Europe, with Sarkozy and Berlusconi, apparently wants toerect a fortress against immigration, the Forum has also discussed forms ofcooperation and solidarity between the North and the South, because thecurrent crisis will worsen unemployment levels and more right-wing pop-ulist pressure on immigrants is to be expected. In the context of the electionsfor the European Parliament taking place in 2009, some organisations, in-cluding Solidariedade Imigrante, have come up with a proposal for a day ofaction, to take place in May, in Europe, against the Immigration Pact and theReturn Directive and demanding the legalisation of undocumented immi-grants. Immigration issues had already been raised at the meeting betweenthe Fórum São Paulo and the Party of the European Left, and SOS-Racismo,attending the meeting informally, made contacts for common action with or-ganisations in Latin America.

At the assembly where the link between the crisis, globalisation and labourwas debated, a call was made for a new societal paradigm, one which does notonly demand more regulation but also does not stop short of discussing theaims of such regulatory processes; a new societal paradigm with a new rela-tionship to nature, focusing on use value instead of exchange value, and on

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ing of how issues related to S&T are part of these problems and are also partof the solutions.

5. It needs to be recognised that the values of scientific communities areshaped by, and rooted in, historical and cultural processes. The autonomyand social responsibility of researchers and the openness and universality ofscience need to be promoted while being sensitive to contemporary socialand cultural diversities.

6. We recognise that diverse knowledge production regimes exist in differ-ent countries and at different levels, including scientific institutions and lo-cal communities. Historical contexts influence the political, cultural, educa-tional and scientific developments in society, giving rise to a diversity in theproduction of both academic and traditional knowledge. A new kind of eco-knowledge is needed, which is sensitive to different knowledge-propertyregimes. In this context we support initiatives such as the Open Access Initia-tive for Scientific Reviews and Repertories of Scientific Self-Archiving.

7. Endeavours to promote informed involvement of citizens in decision-making processes on S&T policies at international, national and local levelsmust be strengthened.

8. There is a need to change the present situation in which the interests ofthe market, corporate profits, the consumer culture and military uses are themain drivers of research, technology and innovation.

9. We are committed to the principle that preservation of human life is acore value of scientific practice and hence call upon the S&T community notto engage in research that is put to military use.

10. There is a major need to promote social demand and empowerment ofthe people in order to exercise democratic control over policies of researchand innovation.

11. Systems of collaborative, bottom-up and participatory research need tobe promoted.

12. We aim to build an international network that seeks to underline theimportance of S&T, while at the same time pursuing an approach that lookscritically at some dangerous trends in S&T today regarding democratic andenvironmental issues and the dynamics of capitalist globalisation.

13. This open network should include both communities of scientists andengineers and diverse social movements. We will aim to establish a democrat-ic dialogue and collaboration between scientific and social organisations.

14. This network aims to strengthen movements that challenge the mannerin which corporate, private, military, political and related state and otherpower interests seek to take over S&T, which impacts the ethical values andproduction of S&T knowledge.

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The following text is the initial result of the first Science and DemocracyWorld Forum which took place at the WSF in Belém 2009. It initiates an

open and inclusive global process that seeks to build an international net-work of movements, organisations and individuals concerned with issues ofscience and technology and other forms of knowledge in relation to societaland democratic concerns.

Broad issues and concerns

1. All knowledge, including science, is a common heritage of humankind.To increase human knowledge has been one of the most fundamental en-deavours of humanity throughout history.

2. Knowledge and the methods of its production can result in emancipa-tion and advancement of societal interests and/or domination and oppres-sion.

3. We support regimes that ensure and promote common goods and othersystems of rewarding innovation that are not premised on creation of mo-nopolies over, or deriving profits from, knowledge.

4. Issues related to science and technology (S&T) form an important partof the overall economic, climate/ecological and democratic crisis that theworld faces today as well as the crises related to energy use and production,food security, war and militarism. It is necessary to deepen our understand-

Shared Concerns and IssuesEmerging From the First Science and Democracy World Forum

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This text is addressed to l scientists, engineers, academics, educators and experts and their institu-

tions around the world;l indigenous peoples, farmers’ organisations, trade unions, other social

and political movements, NGOs, organisations and institutions with scienceand technology concerns

l all actors of the global, regional and local social forums l international, regional, national and local public authorities, all over the

world.Science, research, technologies and innovation are connected to broader

and major issues regarding the future of our societies and environment.Therefore, we invite all of you to find concrete connections between yourown agendas and political priorities and the content of this document.

We invite all scientific and social organisations, actors of social forums andall citizens around the world to enlarge and strengthen this movement fromnow on and invite you to join in following activities:

January 2010: Science and Democracy regional forums January 2011: Second Science and Democracy World ForumFrom now on, we invite all concerned people, all kind of organisations,

movements and networks to organise public debates around the world in or-der to empower the majority of our respective societies and communitiesaround these issues.

The text has been written and ratified by citizens of eighteen countries in four continents.Belém-Brazil, February 1, 2009.

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The birth of the Labour and Globalisation European network (L&G),launched during the World Social Forum in Nairobi in January 2007, was

based on the need to connect the diverse and all too fragmented experiencesof work, from the stable to the occasional, before even trying to find commonfeatures among them and coming up with a platform which could representthe objectives and actions of the different forces.

Second, it is now essential to understand better and try to strengthen thecurrent representation of labour, to achieve which we must respond to theextraordinary strain caused by the intensification of the pace of work and atthe same time by its continued material and professional impoverishmentwith the emergence of a specific social figure: the “poor worker“.

Just think of the devastating growth of informal work and illegal employ-ment, with the difficulty of its very definition, even before its organised rep-resentation, being guided by the realisation that this is not a transitory con-dition but a dominant and permanent phenomenon. We urgently need toreinvent the form and dimension of labour protection that has existed up tonow.

I am thinking about the most successfully established innovations of rep-resentation such as that of domestic workers that led to the birth of SEWA inIndia, which is now a member of the International Trade-Union Confedera-tion, but also of those closer to home, which are more complex and which weare trying to consolidate in some sectors and regions of the country, such as

A Call for a New Social Network for Labour and Globalisation

Gian Franco Benzi

those of the handicrafts sector or in agriculture, where trade-union represen-tation and mutualistic forms have overlapped significantly.

Third, it was and still is important to pursue the possible process of mutu-al influence between unions and movements. I am thinking, for example, ofthe significance that the “no ifs or buts” campaign against the war in Iraq hadfor important associations and for the Italian trade union – particularly theCGIL and CISL – which allowed the construction of a political convergencebetween Catholics and secular movements and of these two camps’ expres-sion of pacifism, which wound up moderating our country's bellicose behav-iour and the further development of the conflict which, six years after its in-ception, still has not lost its power to cause death and suffering. It must besaid that since that time the Italian peace movement has not been able to sus-tain an initiative at a similar level of intensity against ongoing conflicts nor asimilar capacity to attract the forces for peace, which opinion polls tell us arethe majority of public opinion, so as to mobilise them and make them influ-ence the outcomes of still existing conflicts.

In the same way, trade unions and movements must be committed actors,in dialogue with each other, on our home territory: labour. And this not onlywithin the forums and other events arising from these, such as the days ofglobal mobilisation of recent years, to which national unions, including theCGIL, significantly contributed; this committment must be present also inthe process of the emergence of genuine, even if limited, plans of actionsdrawn up together on the basis of goals which albeit partial were significantfor both, and, most importantly, were capable of confronting the weakeningof labour which the current economic crisis, but also the re-organisation ofthe workplace, highlighted and exacerbated.

In this regard, the proposal of an “annual spring conference” of the Euro-pean trade-union and social movements has special significance.

The project, which arose during the European Forum in Malmö and thefollowing meeting in Paris, proposes experimenting with a structure ofknowledge and exchange of experience between movements, trade unionsand NGOs with a view to the major European challenges, including those cit-ed above. An initiating committee was constituted, which will gather net-works, movements and unions from diverse countries of the EU, with the twoBelgian unions which are in charge of the invitations, with the agreement ofthe ETUC and the L&G. Based on previous meetings – arranged and consol-idated by L&G, the meeting will take place in June and will involve, in an ex-perimental form, 6 European unions and 6 European movements or net-works, ETUC leaders as well as a L&G organiser. For this purpose a prepara-tory committee was constituted, which is to define the topics of commonconcern, that is topics of interest to both unions and social movements,

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which have a European dimension and which have seen the participation ofprotagonists involved in the dynamics of the present day.

Next June’s experience should be able to provide a real exchange and havea strategic scope, as the shared response of the movements and unions to theevolution of the crisis, avoiding a conjunctural approach which, although inpart necessary, is one of the limiting factors of the analyses and proposals be-ing advanced in recent months.

In fact, in many ways the union response risks appearing conjunctural andunderestimating the crisis’s special character, which, on the one hand, ex-hibits a coinciding, such as has never been seen before, of the economic withthe environmental and social dimensions, in a mix of which we still do notunderstand the consequences. It is on this terrain that we need to reconnect– and we have already begun to do this in Belém – the flows of information,consisting of the goals and agendas of each social protagonist, consolidatingstill more the features proper to the diverse contextual analyses, but withoutlosing sight of the overall dimension of the issues and the urgent need of re-sponses arising from already existing practice.

It is in this direction that we need to relaunch an analysis and confronta-tion that takes on what now appears to be the strategic nodes of a responseadequate to the upheavals under way.

What is above all involved – as noted in the Belém document – is the re-newal and broadening of the political conception of work, from the produc-tive to the reproductive, from the formal to the informal, from dependent toautonomous. The trade-union movement absolutely must think about this,understanding that in the world of work the crisis produces not only frag-mentation, but also overlappings, new hierarchies and new poverty in a con-text characterised by regressions and surrender of fundamental rights.

One cannot confront the problem, made especially evident by the crisis, ofthe redistribution of work, if one does not break sharply from the consump-tion model and the technological-organisational one. This means to have aprecise point of view on the transformations needed in the life style of peo-ple, this however in a context that is able to make this break credible andtherefore with the proposal of models and styles aimed at a broad satisfactionof people’s needs. It is necessary to stimulate a critical contextual reflectionon the present, but also on choices we have made which contributed to thecurrent problems – and we need to develop proposals such as those furnishedby the social forum process in recent years.

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This year‘s World Social Forum is taking place in the year of all the dan-gers. As Rafael Correa, the President of Ecuador, put it so well on Janu-

ary 29, 2009 during the meeting of the social movements and progressiveLatin American presidents organised by, among others, the Landless Move-ment and Via Campesina: “We are living not in a time of change but in achanged time.”

In fact, we face multiple crises – of finance, of the economy, of energy, offood, of the climate, of geopolitics – which when added together and com-bined produce a systemic crisis of an unprecedented kind. As a crisis of the“globalised” world, it forces us to enlarge our range of analysis when we thinkof changing the world. It is no longer merely a matter of opposing the neolib-eral phase of capitalism (which is coming to an end), but of capitalism itselfand its institutions.

The question of multipolarity

It becomes urgent to examine the question of multipolarity because thecurrent situation disqualifies international financial institutions (IFI), andespecially the International Monetary Fund (IMF) and the World Bank, sinceit is their policies that are largely responsible for pushing the world to thebrink. We should not forget the World Trade Organisation (WTO) which hasimposed the dogma of free trade on the world. As we know, the development

Crisis and the New Internationalism

Christophe Ventura

of unrestrained trade and international commerce is not sustainable from anenvironmental and social point of view.

Yet, these are the institutions that governments want to play a key role indealing with the global crisis when the G20 next meets in April 2009 in Lon-don. We should be vigorously opposed to this operation which intends to askthose who have caused the crisis to take steps to fix it. This meeting of the il-legitimate G20 will be an important opportunity for social movements tomake themselves heard in favour of real multipolarity based on several de-mands:

(a) Profound reform of the UN and (b) the creation of a new system ofdemocracy, based on, among other things, respect for human rights, satisfac-tion of social needs, decent jobs, popular sovereignty, control over food, re-spect for the environment and cultural diversity.

These perspectives are in direct opposition to the political model thatemerged from the Washington Consensus: global governance.

Extolled at Davos – again this year – by governments, multinationals andthe IFI, this model is based on the notion that economic players and govern-ments should take charge of the world’s business, without the people, andunder the influence of the hegemony of economies at the centre of capital-ism, especially that of the United States.

This totalitarian model is significantly weakened by the global crisis, thefailure of the policies of the hawks in Iraq and Afghanistan, the renaissance ofAsia and Russia, the new trend toward economic regionalisation, the emer-gence of political centres of power (like the Bolivian Alternative for the Peo-ple of our America – ALBA – in Latin America) that depart from neoliberalmodels. In fact, Western hegemony is shaken by the establishment of thesenew poles that create a new international hierarchy. In this context, the atti-tude and the behaviour of the Obama administration will be very important.

At the same time, new tensions, relatively independent of the crisis itself,can be expected: wars in the Middle East, marginalisation of Iran, tension inSoutheast Asia, India-Pakistan, etc.

Need for multipolarity and internationalism

Thus, more than ever, there is an urgent need for multipolarity and jointlyresponsible internationalism. This is what the global justice movement mustwork for, sustained by the fact that the ideological hegemony of neoliberal-ism has been considerably weakened, in large part by the social justice move-ment itself.

However, at the same time, it must lead to the development of a commonanalysis of the current crisis and a rejection, once again, of the new capitalist

paradigm that is being constructed: “green capitalism” and the global GreenNew Deal that is being promoted by the United States and the EuropeanUnion. In its name, political and economic elites will try to rescue the legiti-macy and credibility of the system and will develop new ideological alliancesamong, on the one hand, befuddled neoliberals who agree (temporarily?) torestrain certain of the most fundamental aspects of liberalism – market self-regulation – in order to save the core and, on the other, neo-Keynesians whorally around the preservation of productivism.

Finally, and this is its greatest challenge, the social justice movement shouldreview its relationship to its practical political experience of challenges to thecapitalist system, especially in Latin America, and contribute to the conver-gence of social and political players and, in ways still to be determined, to in-stitutions as well as governments.

There are unprecedented sources of support for action: notably, those ofALBA, where great strides are being made in the very advanced statements ofsocial movements and governments.1

1) See the file that contains the balance sheet of the 2009 FSM of Mémoires des Luttes:www.medelu.org/spip.php?rubrique33

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The Forum began in the Afternoon of November 25, 2008 after the GreatMarch of African Dignity. Many thousands of people, from all over

Africa, marched with drums and trumpets, music and dances and slogans at-tacking the IMF, the World Bank, and the WTO.“Long live Africa. Down withthe imperialists”. “Long live the people’s Africa marching against neoliberalglobalisation”. “Another world is possible. Another Africa is possible”.

All this was vibrant, full of energy, and gave renewed life to each one of us.The confidence, the enthusiasm shown by the youth, the women and thepeasants who had come in numbers, by caravan or other means, had allowedexchanges of views looking towards the future, towards social transforma-tion, freedom, peace, rights and equality.

Bamako-2006 (Multi-centred World Social Forum), Nairobi-2007 (WorldSocial Forum) and today Niamey-2008 (African Social Forum) – all these Fo-rums bore witness to growing participation, growing interest, and to a highlevel of discussion in the plenary sessions as well as in the workshops. Thiswas a well organised forum.

The names of the meeting halls give an idea of the seriousness and depthof the political tendency: Kwame Nkrumah, Gamal Abdel Nasser, ThomasSankara, Lumumba, Myriam Makeba, Julius Nyerere, Modibo Keita, JiboBakari, Amilcar Cabral. All these names evoke the awakening of the Africancontinent and confirm the present-day rejection of subjection and imperial-ist domination in all its forms, as well as the need for a profound change.

Activities of the International Frantz Fanon Network at the African Social Forum Niamey, Niger

International Frantz Fanon Network

Before the inauguration, the issue of immigration was presented by agroup of artists from Mali, immigrants themselves. They made this issuecome alive in all its touching and poignant reality. We could only regret thatit was not possible to see this event in France or elsewhere.

All through the three days of debates, the discussions and questions in theplenary sessions and workshops were lively, committed and very interesting.

The themes of the three plenaries were: “Africa in the Arc of Crises”, “Africain Global Geopolitics” and “The Challenges of Building Democracy inAfrica”. The discussions in these plenaries confronted with great seriousnessthe realities of which we are, today, the victims.

The workshops tackled many questions such as the food and agriculturalcrises, problems of women and children, of youth and peasants, of the debt,of immigration, the new concept of universalism, how to react to the theo-ries of the clash of civilisations, to the problems of public services, the rightto land, sovereignty, education and many other questions.

After the not very encouraging Malmö European Social Forum, the Ni-amey Forum, by its mobilisation and great participation, proved that the Fo-rum remains, and can still continue for a long time to be, an open area ofconvergence of ideas and activists for another world of solidarity.

The Frantz Fanon Youth Camp was the meeting point of African youngpeople ready to understand, to challenge and to organise themselves to faceall the scourges and all the conflicts that afflict Africa. This area enabled themto free their dynamism and to let the deaf world learn that “Africa is ready totake up the challenge, and the future is promising”. The fact that the youngpeople met in this camp, named after Frantz Fanon, aptly expresses the ideathat Fanon remains contemporary and that he is the very expression of re-sistance to neoliberal globalisation and of struggle for the emancipation ofthe African continent.

The Niamey Forum has, more than ever, affirmed the determination of thepeoples of Africa to consolidate the struggles on all fronts so that Africa maybe “liberated” and that it remains a force in the international “alternativeworld” movement.

We have several objectives:1. To contribute to the full in the lateral exchanges so as better to know

the situation and to be enriched by various experiences and actions againstneoliberalism in the present crisis.

2. To exchange ideas between activists and intellectuals of Africa and oth-er continents about the issues regarding an alternative globalisation and al-ternative relations between peoples, countries and continents.

3. Discuss the state of thinking and analyses on the problems arising from

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colonialism, neocolonialism and from all forms of domination and alien-ation.

4. To continue to strengthen the networking and the work initiated dur-ing the Nairobi World Social Forum.

5. To contribute to promoting the works of Frantz Fanon, their contem-porary relevance, to contribute to the creation of a Frantz Fanon Centre andof Frantz Fanon Circles.

6. To present the Letters from the South to the North as a pamphlet, tomake contacts for continuing solidarity actions.

7. To organise the international coordination of the network.We held three seminars in which between 60 and 80 people took part, a

third of whom were present in all three seminars. Many others, who couldnot come back because of prior commitments, insisted on telling us how sat-isfied they were and that they were determined to continue. The Letters fromthe South to the North pamphlet was greatly appreciated. Many applicationsto join the network were handed in. Many people committed themselves torunning and coordinating the network and to creating circles.

All agreed that the themes of our workshops were well inter-connected.These workshops were too rich to be summarised in a few lines. Some ideasemerged:

During the Universal and the Universals workshop, the discussion broughtto the fore the meaning of internationalism today, and a view of the univer-sal that kills diversity.

The Human Civilisation and Civilisations. The Clash of Civilisations work-shop, starting from an analysis of resistance to colonialism, stressed somevery innovative elements, particularly on the confrontation between will andthe real. It enabled the question of the relation between cultures, territoriesand frontiers to be tackled.

The third workshop on The topicality of the memory of slavery and colonial-ism for acting together against capitalism and neoliberalism strongly referred tothe contents of the rallies against neoliberalism and the notion of “alterna-tive-worldism”.

The importance of the re-emergence of interest in the works of FrantzFanon is broadly confirmed. This interest is closely linked with the search foridentity and political perspective. In Africa, a movement for emancipationand autonomy is asking itself questions about African identity and values,finding its way out of alienation, and about the directions of struggle.

A part of African youth is seeking a way between the assertion of identityand openness, rallying the peoples and identifying the struggles they have incommon. This youth has the opportunity of convergence with ideologicaland scientific work on questions undertaken by a number of African aca-

demics and intellectuals for many years. The choices at issue in the strugglesare stark: between turning inward, fragmentisation , civil wars or new areasof human emancipation. Drawing on their history has become essential.How must this history be read?

We want to avoid acting “to the West of the Left”. We want to take our timeto listen, for a real dialogue. We wanted strongly to assert that our actionswere connected to the usefulness of these struggles for us, here where we live,in our own countries and continents as well as in Europe.

We have established connections with many of the 23 intellectuals who is-sued the open letter in reply to Sarkozy following his scandalous speech inDakar.

It has been decided to create Fanon Circles in several countries (Niger,Ivory Coast, Guinea, Senegal, Mali, Algeria, Benin, Mauretania), to coordi-nate the work and strengthen international coordination. Sequels to the Let-ters of the South to the North are expected. We also envisage holding a sym-posium on Africa’s share in European cultures: the production of the bigfoundation myths, the link with slavery, contemporary racism, aesthetics,politics, with the impossibility of any solution for Europe without Africaand vice versa.

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Chronicles

man rights violations: that is also the position of the Russell Tribunal, whichin its tradition of inquiry on War Crimes in Vietnam, launched its new activ-ity on Palestine on March 4, 2009 in Brussels: a citizens’ initiative aimed atthe reaffirmation of international law as the basis for solving the Israeli-Palestinian conflict, and at raising consciousness of the international com-munity’s responsibility in the continuing denial of the rights of the Palestin-ian people.

However, even now, after the donor conference in Sharm el-Sheikh inEgypt raised a total of more than $5 billion to assist the Palestinian economyand rebuild the Gaza Strip, the raids carried out by the Israeli air forces con-tinue to target the Strip and cause fatalities, while border crossings remainclosed or are opened by the Israeli Authorities for a few hours a day and notto all goods or people: pasta for example was not allowed in the Strip – sinceit was considered a luxury good and not humanitarian aid, as for examplerice is – and toys for children from UNICEF were denied entry because theywere not “a humanitarian priority”.

We have to find a way to oblige Israel unconditionally to open all the cross-ings for people and goods.

While the bombs were still falling on the Strip, our delegation of MEPs vis-iting Gaza really saw the hell that ensued: we saw people stunned by terror,exhausted from insomnia due to severe bombardment, desperate peoplesearching for corpses in the rubble and suffering from the blockade that hadalready been imposed on the civil population of the Gaza Strip as a form ofcollective punishment. Hundreds of Palestinian patients have died since June2007, unable to leave the Strip due to the closure imposed by Israel. Amongthese deaths, 35 % were children.

Our delegation of MEPs witnessed a clear intention to destroy in Gaza. TheIsraeli forces did not miss their targets and thus destroyed most of the infra-structure often built with European aid: it was a precisely calculated target-ing by the Israeli Authorities, not only using the air force but also with tanks,bulldozers and dynamite, in order to make a desert, a scorched earth, ofGaza’s borders with Israel, to create a dead zone instead of the industrial areathat had been there, because of the proximity of the borders and to facilitatecommerce and the transport of goods.

There were no militants launching rockets in the American School that wehave seen completely destroyed: it was an avant-garde school attended bysons and daughters of businessmen and intellectuals, the same school thatHamas tried many times to close, and now it is the Israeli bombs that havesucceeded in doing so, burning all archives, documents and classrooms. Italked with the director, an extraordinary person, who, indignant and en-

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“The people of Gaza have been restricted to survival rations for over 20months now. Restrictions on food types, clothing and school books are keep-ing innocent children underfed, cold and uneducated. Hospitals, schools andthousands of homes need to be rebuilt. We cannot talk seriously about re-building Gaza without the opening of all crossings.”

(Jeremy Hobbs, Executive Director of Oxfam International)

I visited Gaza Strip recently, during and after the Israeli aggression, withtwo delegations of the European Parliament. Each time, I and the other

MEP (Member of European Parliament) participants in the fact findingmission were terribly shocked and dismayed by the unbelievable destruc-tion we witnessed in the Strip, and we then delivered reports to the EP. Thisdestruction has been too often denounced not only by International, Israeliand Palestinian NGOs – Amnesty International, Human Right Watch, Ox-fam and many others – and by prominent Israeli journalists and peace ac-tivists, but also by the UN Human Rights Committee that is now investigat-ing the crimes committed in the war in Gaza, in which more than 1,400 peo-ple have been killed, many of them children, innocent civilians targetedfrom the air, on land, from ships, with no chance of escaping since all bor-der crossings were closed.

Now it is really time for Israel to be judged and held accountable for its hu-

A Visit to the Gaza Strip

Luisa Morgantini

tinians receive humiliating treatment and are beaten, the alarming spread ofcolonies, the take over of land and water resources and the destruction ofcrops. Thousands of political prisoners are even denied visits by family mem-bers.

Instead of an assistance policy we must work for a political solution. Pales-tinians need not just aid but above all justice.

That is why the EU must do everything possible using all means, changingits double-standard policy, starting with the suspension of the Associationagreement and a halt to the upgrading of relations with Israel, since it doesnot observe human rights and international law. The European Parliamenthas up to now refused to vote for upgrading the relationship, and many res-olutions have called for the end of the siege in Gaza and the need to work forthe unity of the Palestinian leadership and territories.

Moreover, we still have not facilitated the dialogue between Fatah andHamas. It was a big mistake not to recognise the government democraticallyelected by the Palestinian people, and even more not to recognise the unitygovernment which came out of the effort of the Palestinian prisoners belong-ing to all factions, in the first place by Marwan Barghouti. We should nowhelp Hamas to work on a democratic system and to fight the occupation withnon-violent resistance; we have to work for a Palestinian Government ofUnity, indispensable now more than ever.

In this, we urge the US immediately to change its policy; otherwise thehope arising for Obama’s new gestures will start to flounder. During her lastvisit to the West Bank, the new US Secretary General Hillary Clinton definedthe two-state solution as “ineluctable”, but she did not take a firm standagainst the human-rights violations committed by Israel, and she did not ut-ter a single concrete word of condemnation vis-à-vis the settlements issue.

I strongly believe that the international community must give the most se-rious consideration to the changes in Israeli society resulting from the elec-tions and in particular regarding the new Israeli political representatives,such as the extremist and racist Lieberman who called for forced displace-ment of Arabs “somewhere else“, but also Netanyahu, who never accepted thetwo-state solution and clearly supports the settlements policy in the WestBank.

Today, settlements still represent the major impediment to all peace nego-tiations, since their expansion corresponds to a further, constant, daily andpersistent aggression toward the Palestinian people and territory.

While the Israeli aggression in the Gaza Strip was escalating, the erection ofnew settlements was accelerating: according to a recent report by the Israeliorganisation Peace Now, the Israeli settlements in the West Bank increased by69% in 2008 compared to 2007, and the number of settlers rose from

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raged, is still expressing the wish to live in peace. He is looking for anotherlocation for his students.

In addition to these serious attacks on any perspective of future economicgrowth, the Israeli aggression succeeded also in terrifying the civil popula-tion, denying them any possibility of improving their situation on theground. They did so by means of white phosphorus arms, weapons that causevery painful and often lethal chemical burns, or with shells exploding in theair and scattering flechettes in heavily populated areas, which describes theentire Gaza Strip, with its 1,500,000 inhabitants. Even UN schools and hos-pitals have been struck: no human-rights consideration was able to restrainIsrael from ruthlessly demonstrating its muscle.

We saw the devastated Al-Quds Hospital in Gaza, run by the Palestine RedCrescent Society, that was hit by explosions causing a fire that put the pa-tients’ lives at risk. It was painful to see the whole division used for psy-chotherapy and recreational activities, where painters, artists as well as a the-atre company used to work, completely destroyed, with an entire painting ex-hibition shattered and pictures burnt.

Our MEP delegation also met the survivors of the Samuni family, an im-portant family of farmers and chicken raisers in Gaza: after having destroyedall their properties, the Israeli soldiers forced all of them to enter the samehouse that they bombed, killing 29 members of the family. We experiencedthe dignity and the humility of the father and were astonished at the lucidi-ty and strength of his 13-year old daughter who had lost her mother and herfour sisters in the bombings – a lucidity that the international communityand the European Union were never able to show: we have only been able tostammer a few ineffective words in the face of the Israeli crimes committedin Gaza and the occupied West Bank; we have been unable to stop the mas-sacre, unable to make Israel respect international law, unable to prevent hu-man grief – unable to do anything.

Of course Hamas also must assume its responsibilities: launching rockets,generating fear and threatening the Israeli civilian population represent un-lawful and criminal acts that have to be condemned and stopped. But theasymmetry is undeniable, even if one death is enough to condemn all vio-lence: since 2002, 20 people have been killed in rocket attacks by Palestinianextremists – which is unacceptable – but at the same time more than 4,000Palestinians died both in Gaza and the West Bank, including hundreds ofchildren.

As the European Union, we did a lot to support the Palestinians economi-cally; however, they need freedom and independence. Since 1967, Israel hasmilitarily occupied the Palestinian territories – a brutal colonial occupation– characterised by land theft, house demolitions, checkpoints where Pales-

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dressed only to the Palestinians. It is time to ask to the Israeli Authorities toimplement the agreements and international law. This is a crucial moment;in Cairo Palestinians are trying again to form a unified government. The in-ternational community should support these efforts and not try to imposeconditions on them.

But we have to convince Israel that it cannot continue violating interna-tional law and that it must start to listen to all those voices calling for peace,rights and dignity for the Palestinian people, as the only way to achieve secu-rity; it must listen to the many extraordinary Israelis and Palestinians strug-gling together in a non-violent way against the occupation, representing aculture able to deconstruct the figure of the enemy and the notion of revenge,by which everybody loose. They are a living miracle in this context of humil-iation and reiterated human-rights abuses; they refuse to be enemies and de-mand a stop to the occupation; they legitimately believe that we cannot buildsecurity on the basis of death and the humiliation of all Gazans and Pales-tinians, but only on justice and an end to the occupation.

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270,000, at the end of 2007, to 285,000 at the end of 2008. Recent reports(Peace Now) affirmed that at least 73,300 Israeli housing units are slated tobe constructed in all of the West Bank, doubling the existing number.

In addition to all this, the Jerusalem Municipality is now planning to de-molish 88 residential units, including 114 houses inhabited by 1,500 Palestin-ian residents of al-Bustan Quarter in Silwan, East Jerusalem, in order to re-place them with an archaeological park. Moreover, 36 more Palestinian fam-ilies, about 230 people, received new demolition orders for their homes inAbbasieh Quarter, still in Silwan, and another 55 families in Shu’fat Camphave to evacuate their dwellings, bringing to 179 the total number of Pales-tinian homes slated to be demolished. If these demolitions in Silwan, wheregroups of settlers are already established, are implemented it would be thebiggest demolition plan since the beginning of the Israeli occupation in 1967,in an historic and symbolic area of East Jerusalem less than 400 meters fromthe Al-Aqsa Mosque and the Wailing Wall. Even a group of twenty Israeliwriters and researchers -including Amos Oz and David Grossman- wrote aletter to Jerusalem Mayor Nir Barkat urging the government to rescind or-ders to evict people from their homes, as such policies, they said, violate “el-ementary human rights”.

With such plans and deeds, how can we believe that Israel really wantspeace and security?

Israeli policies have never really tried to impede the radicalisation of theconflict by giving concrete signals or showing a commitment to achieve a justand shared agreement that would be sustainable and lasting in all the region,and not doing so is also a risk for the state of Israel.

We have already seen pogroms perpetrated by Israeli settlers on Palestini-ans in Hebron, a ghost town where 120,000 Palestinians live as hostages of500 or 600 Israeli settlers protected by thousands of soldiers and paramilitaryforces, where more than 800 Palestinian shops were forced to close becauseof various aggressions and where, after years of complicity, backing and con-nivance by the different governments carrying on a colonial policy, the Israelisettlers’ violence exploded into attacks on Palestinians, with the uprooting oftrees and the burning of homes and of mosques.

If the international community is unable to pressure the new Israeli gov-ernment into endorsing the two-state solution, the freezing of all settlementexpansion in the West Bank and the respect of all agreements and interna-tional obligations already signed, nothing will ever change in the area. InGaza, even hope itself is in danger of being definitively destroyed. In order torestore it, the international community must be able to demand of Israel theimplementation of international law. Up to now, requests have been ad-

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crisis and concerned the trade-union movement) explains this joint ap-proach. Over the last few years, all the trade unions have come to realise thatif they want to bear upon the situation and be heard by the wage-earners,they have every interest in working with others. The CPE experience showedthat unity does not weaken the specific approach of each protagonist, but, onthe contrary, enables them to be heard in a context of the overall strengthen-ing of trade-union rights. Conversely, no single union can, by itself, create asufficient balance of power to carry its own proposals through to a success-ful conclusion.

Furthermore, we have negotiated a development of the rules coveringtrade-union representation in France. For the first time, the vote of the em-ployees in their work places, by means of professional elections, will deter-mine the list of representatives in that work place, in that particular industryand, at the national level, in that trade. All trade unions must, thus, in someway respond to the expectations of the wage-earners.

The founding congress of the International Confederation of Trade Unionshad envisaged international action for decent working conditions on Octo-ber 7, 2008. This action occurred in the middle of the crisis, and we decidedto make it the first reaction of wage-earners on an international scale to re-fuse to be victims of the crisis. Following this action, the CGT proposed to allof the French trade unions that they examine what actions to carry out joint-ly to extend this mobilisation. The idea of common action was not rejectedbut postponed, the other organisations feeling that the time was not appro-priate because of the industrial tribunal elections in which we were compet-ing. However, we started to work on proposals for common demands. Afterthe CGT’s score (34 %) and its growth in the industrial tribunal elections, thereservations were eased and the date of January 29, 2009 was announced asour appointment for action. Our platform of common demands was pub-lished on January 5. January 29 saw a demonstration of extraordinarybreadth and size for a first initiative, whose level could be compared with thegreatest mobilisations of the last twenty years. Wage earners from the privateas well as the public sector were there, but also, quite exceptionally, smallshop-keepers, self-employed craftsmen and even some owners of small firms.It was really working France that was demonstrating, the France that felt itwas being sacrificed to the shareholders or, more precisely, to the world ofcapital and of shares. We had the feeling of an experience shared between allthose who only have their work on which to live.

The second day of work stoppages and demonstrations, March 19, evensurpassed the size of the January 29 demonstration! More strikers, moredemonstrations, more demonstrators. It was supported by 3 out of 4 Frenchpeople.

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Maryse Dumas is a national secretary of the Confédération générale dutravail (General Confederation of Labour, CGT). The CGT is the

largest of the five major French trade-union confederations. Maryse Dumasspeaks with Elisabeth Gauthier and Dominique Crozat about the work of theCGT and working-class mobilisation in France.

Gauthier/Crozat: Trade-union unity in the current mobilisation is an his-toric first. How would you describe it?

Dumas: Today’s unity of action has a completely exceptional character inseveral ways. All of the trade unions have joined the inter-union coordina-tion. The content of the proposals put forward in common aims at promot-ing solutions to overcome the crisis. It covers at once purchasing power, jobs,public policy, and the control of international financial markets. This is quiteunprecedented. An inter-union coordination was created to secure, after fourmonths struggle, the retraction of the “First Employment Contract” (CPE)draft bill. This success partly explains why we were able to rebuild an inter-union coordination of wage-earners. However, in 2006 we were just demand-ing the withdrawal of a bill or the rescinding of a law – today we have reachedthe stage of making alternative proposals for the crisis. Another historicprecedent is the national agreement on unity of action between the CGT andthe CFDT in 1966, but only two trade-union confederations took part.

The extent of the crisis (but also certain developments that preceded the

The Crisis and the Social Movement in France

Maryse Dumas, a national secretary of the CGT in an interview with transform!

Elisabeth Gauthier/Dominique Crozat

on the classical (indeed caricatured) discourse of a MEDEF with its back tothe wall in defence of “the rights of property” (the actual words), refusing anynotion of making the firms responsible, of new management criteria or ofnew criteria of wage / profit sharing.

Nicolas Sarkozy is also seeking to blur traditional reference points. He isdeveloping the idea of a three-way division between capital and labour. Hewants to give people the impression of an almost anti-capitalist President ofthe Republic who would call into question stockholders’ dividends; he couldthen appear as a conciliator between the trade unions, which have recklessand ill-considered demands, and MEDEF, with its back to the wall defendingits privileges … a President of the Republic capable of embodying, if not athird way, at least a consensus.

Gauthier/Crozat: Because of all this, wouldn’t the social struggle be obligedto take on more political issues?

Dumas: A poll that was published a few days after the February 18 socialsummit expresses the situation quite well: 70 % of the population does notbelieve that the measures announced by the President of the Republic willanswer the problems. However, only 20 % think that the political oppositionhas better proposals for economic and social revival. On the other hand, 60 %think that the way forward is by negotiating the trade-union proposals. Thus,for the majority of the population, the political and economic alternative isin the context of the inter-union coordination’s platform rather than in theproposals of the left parties. The disrepute of the left, therefore, has not yetdiminished. In such a situation, it is clear that the inter-union coordinationand its actions express hopes that go far beyond those having only to do withthe domain of trade unions.

Moreover, the conflict in Guadeloupe, after 45 days of mobilisation, hasscored a genuine social victory. Yet it was organised by a collective, the LKP,made up of trade-union, political and voluntary associations. Some peoplefeel that it requires only one more step to apply this recipe to metropolitanFrance.

However, things are not quite so simple. The present authority of the inter-union coordination is based on three inescapable factors: the genuinelytrade-union character of the process, the complete unity of action betweenall the union organisations and the alternative and open character of its plat-form that allows for advance by negotiation. Were one of these factors to beweakened the whole dynamic would be impacted. The people who are rub-bing shoulders in the strikes and demonstrations have a great variety of po-litical opinion. On the other hand, they are united on what they want tochange in the situation. This is the strength of the trade union – this ability

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This new reality of the total balance of power is causing all ideological de-bates to be repositioned.

For several years now, we have had the idea drummed into us that publicservices must be privatised, that the number of jobs for public employeesmust be cut. Since January 29, on the contrary, there has been a re-assertionof the need for public services to resist financial speculation and impress oth-er values on society.

For several years we have been told that France was lagging behind othercountries because labour was over-protected and that progress came fromflexibility. With January’s action we saw a sort of ideological inversion: ifFrance is resisting the crisis rather less badly than other countries, it is pre-cisely because of its protection of labour, of its public services, or social secu-rity, however insufficient they may be. It is not by destroying them that weare going to be better able to resist the crisis; on the contrary, it is by think-ing how to modernise them, to make them more effective and efficient.

Gauthier/Crozat: Can we talk of a tendency to overcome the divisions be-tween the unemployed, casualised workers and wage-earners having steadyjobs, or is there a danger that these divisions will be exploited in order tomove toward more authoritarian solutions on the political level?

Dumas: Some divisions are becoming less marked, especially as regardsmaking the unemployed feel guilty.

However, other divisions are appearing. Faced with the crisis, the govern-ment is generating new divisions to avoid having the very basis of its policychallenged. It is developing measures to compensate partial unemployment(which is very important) – but not all wage-earners facing employment dif-ficulties meet that classification. There are also divisions between wage-earn-ers of major firms that can more easily be unionised and those of firms work-ing as sub-contractors. These are new challenges that must not be underesti-mated.

Ideologically, neither the MEDEF (employers’ federation) nor the govern-ment are standing still. Today the government is the first to announce badnews! Even before the unemployment statistics have been published, it givesout staggering figures. There is a wish, on its part, deliberately to increasefears, because fear does not encourage struggle. Behind this “educationthrough fear” is the idea of resorting to a supreme saviour … It is a fairly sol-id way of enabling the legitimisation of very authoritarian policies.

The other aspect is that of the employers. MEDEF’s president at first saidthat the crisis plunged us all in a state of “dumfoundedness” – a term used toreinforce the climate of fear I have just mentioned. Faced with the very strongcalling into question of the whole system, she is now basing her arguments

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Politics and trade-unionism do not, indeed, live in autonomous watertightcocoons, separate from each other. It not even a matter of there being do-mains reserved for one or the other. It is rather a question of the nature oftheir objectives and the specific character of their processes.

The CGT does not seek to accumulate the discontent against this or thatpolitical authority in order to contribute to replacing it with the left at thenext election. Its objective is to improve the situation of wage-earners as faras possible, as quickly as possible, regardless of the kind of government in of-fice at the moment. It constructs the relations of forces and brings them to-gether, not in terms of how people have or will vote, but on the basis of de-mands for changing reality right away. Naturally, due to its identity and itsfundamental choices, the CGT does not hesitate to act on major political is-sues. Its independence is not indifference or neutrality. However, we rejectthe concept that has prevailed for a very long time in France of the role of thetrade union being subordinate to the role of the political party, even guidedby it.

As for the reference you make to the movement against the CPE, I wouldpoint out that the action was led for four months by an inter-union coordi-nation of 12 organisations, of which 8 were wage-earners unions and fourwere students’ or secondary-school students’ unions. It is true that the con-crete mobilisation was “pulled forward” by the students and secondary-school pupils, but it was the inter-union coordination that enabled the en-counter between the generations, the intervention of the wage-earners and,in the end, success.

I would also point out that most of the time the ad hoc associations thatare created for this or that demand, for this or that cause, are formed to sup-port major unitary and trade-union mobilisations. I am not sure that thesecollectives would have, by themselves, the capacity for mass mobilisation, be-yond some media breakthroughs. The CGT does not see these movements ascompetitors but as sources of emulation, as complements to our activity. Thepresence at the head of the January 29 demonstration of the “ni pauvre nisoumis” Association (“neither poor nor submissive” – a campaign of handi-capped people) is a very strong symbol of this complementarity – but also ofthe solidarity and fraternity of struggle.

These single-issue associations alert us to certain problems and, as they areonly concerned with the one issue they don’t let go of it, whereas we, as atrade union, are always faced with having to arbitrate between priorities.However, these associations, these movements, express themselves all the bet-ter to the extent that they are working in an inter-union environment thatenables them to demonstrate. As a result, everyone is connected through thedecisions of the inter-union coordination. It is by sticking to our trade-union

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to unite people and at the same time to alter the balance of forces and changereality without waiting for the next electoral deadline.

The CGT does not agree with the position expressed by some unions in thecoordination that we should forbid the formation of collectives and supportcommittees. We think that the best way to avoid confusion is for the inter-union coordination to play its part to the full, to be open in its relation to allinitiatives and to occupy the whole area that it must hold. The CGT will notprevent the formation of any collective, especially seeing as any large socialmovement is necessarily accompanied by broad and diverse initiatives otherthan trade-union ones.

However the CGT will not let any confusion arise as to what is a matter forthe trade unions, on the one hand, and what concerns political parties. Thosewho think that it is up to the trade-union organisations to solve the problemsof the left not only make a fundamental mistake but risk weakening theprotest movement by dividing it. It seems to me that one would pose theproblem better by raising it directly with the left political parties. It is up tothem to discover within the current mobilisations the resources needed fortheir own renewal.

Gauthier/Crozat: Are there not stimuli, impulses that can come from otherplaces? In the area of social movements, there are fresh developments. For ex-ample, the “Call of Calls” is an attempt to organise, to regroup and to glob-alise the movement, but not in directly trade-union or political forms. In thefight against the CPE, the call to the unions came from the young people. Theboundaries between political and trade-union territory are not as clearly de-fined as before. The idea of a Popular Front is making the rounds today.

Dumas: You say that “The boundaries between political and trade-unionterritory are not as clearly defined as before”. I think the opposite is true. Thetrade-union movement, as far as the CGT is concerned, has learned from theexperience of a century of struggle in which politics and trade-unionismwere so intermingled as sometimes to merge.

During the Popular Front, the strikes followed the left’s coming to power.We are today in a markedly different situation! May 68 is evidently in every-one’s thoughts. But not only did it not lead to any political outcome; it evenled to a strengthening of the Right. There were, nevertheless some importantsocial and societal gains. The left did subsequently come to power in 1981.Prior to 1981 all trade-union demands were subordinated to the left’s Com-mon Programme. Today we have the feeling that the left is lagging behind theinter-union coordination’s programme. Neither situation is satisfactory.There is probably another equilibrium to be found so that each of the twosectors acts like itself and lends each other mutual support.

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Gauthier/Crozat: During Roosevelt’s New Deal, income taxation was in-creased by 80 or 90 %. Should not the demand be raised for a completely dif-ferent taxation system?

Dumas: The CGT is calling for a reform of taxation to make it both fairerand more efficient. Recent policies have undermined the progressive charac-ter of personal income tax to the benefit of the richest. Social inequalities areincreasing. The policies of lightening income tax weaken the distributive po-tential of taxation. They benefit the richest most and deprive the most vul-nerable of active social policies. We should also look at what is happening re-garding financial revenues and the revenues of company directors. Stock op-tions are exempted from social-security taxes: social security estimates its lossof revenues at 6.5 billion euros every year!

The CGT has declared itself for a taxation that obliges the companies tocontribute by taking into account their financial revenues and what they de-mand from society in order to develop. Companies benefit from the infra-structure of road networks, from public services, the fact that the populationis educated, that there are schools, nurseries, crèches and social security. Theymust be called upon to contribute to their financing.

If France takes fourth place among countries receiving foreign investments,if the hourly rate of labour productivity is the highest in the world, it is pre-cisely because of its services and public infrastructures. This deserves somereturn from business to the community.

We are in favour of a freeze on dividends during the period of the crisis.There must be some work on a wages policy; there must be another divisionbetween labour and capital calculated directly from the added value. Work-ing conditions and labour productivity must also be improved.

Turing now to the public services. The post-war nationalisations represent-ed a strong pedestal, along with public services and wage-earner statutes.They were levers for steering and intervening in the economy, in industry andresearch. Those of 1981-1982 were limited to the nationalisation of capitalwithout changing its logic or its previous management criteria. Thus theycould be as easily undone as they had been promulgated. However, the pri-vatisations carried out by the Jospin government attacked the hard core ofpublic services. This is one of the historic reasons for the disaffection with theleft, which still persists today. The CGT waged hard struggles on these issues.Today we are thinking how not just to stay on the level of defending the re-maining public services but how to make winning proposals for fresh re-sponses to public services. We want to put forward the demand for “publici-sation” opposed to the process of privatisation currently under way.

Gauthier/Crozat: Is there not reason to fear, in the present crisis, an inten-

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niche that we can enable the movement to take place and make enable every-thing that feeds the movement – collectives, associations, political parties –to find its place.

A last word on this subject: solving the left’s problems is not a problem ofthe inter-union coordination, which is connected to the fact that Frenchunions do not claim to be left-wing – nor right-wing for that matter. Theyare trade unions. The debates, the differences, even the divergences betweenthem do not bear on political options but strictly on trade-union ones: theapproach to collective bargaining, the balance of forces and the concept ofcompromise. Relations with the state, to the company, to the market and toEurope are equally important. It is all the more laudable that despite thesefundamental differences the unions have succeeded in uniting.

Gauthier/Crozat: The English have an expression “the market state”. How isthe debate on state intervention developing?

Dumas: We must fight the idea that neoliberalism means the disappearanceof the state or states. Neoliberalism needs the state. The debate is thus notabout more or less state but about the nature and objectives of state policies.The liberals, or the representatives of big capitalist interests, turn to the stateto get it to help them out of the crisis by massive injections of funds takenfrom the tax revenues and wage-earners’ salaries. In France, trade unions aredemanding compensation for any state aid to the corporations. The inter-union coordination wants to make state aid conditional on wage agreements,including on the quality and volume of jobs. It is the CGT’s position that be-fore the state decides on this kind of aid it should consult the representativesof those employed by the firm or by the bank to find out if this aid is justi-fied and to allow them to check on the way it is used. For example, the auto-mobile manufacturers made their workers work at full throttle, overtime foreight months, enjoying exemptions granted by the government for overtime.The production objectives for 12 months were thus achieved in 8! And thegovernment is giving them billions more! We also have the example of Total,which has made fabulous profits and is now announcing the cutting of 500jobs – which will mean 2,000 job losses among its sub-contractors. If Totalcuts jobs, who is going to create them? Moreover Total, despite its profits,nevertheless enjoys the same lightening of social contributions on the salaryof all its employees for all salaries up to 1.4 times the minimum wage.

One should not forget the regulatory role of the state. Up to now the polit-ical authorities have refused to admit that its policy of deregulating theLabour Code, working hours and public services be challenged. But it mustbe challenged.

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However, the ETUC has already allowed convergent mobilisation aroundthe services directive and the working hours directive. This is the directionwe must tirelessly pursue. Mutually backing one another up while respectingour differences is also part of trade-union culture.

Gauthier/Crozat: Thank you for the interview.

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sification of compelling wage-earners to compete with each other in Europe?How can European trade-unionism play its role?

Dumas: The European Trade-Union Confederation (ETUC) has called fora mobilisation on the occasion of the G20 summit in London; it has launcheda campaign of European mobilisation against the crisis, with demonstrationstaking place on May 14 and 15 in Prague, Berlin and Brussels. However,ETUC is not opposed to the European founding principle of “free and undis-torted competition”. But Europe is coming apart at the seams and sinking un-der the weight of this dogma, which has not let it escape and is paralysing itspossible movement to recover.

The CGT regards as positive an ETUC idea that a certain number of serv-ices or activities necessary for fundamental rights should escape the compet-itive criteria. The more struggles there are in this direction, for increasinglywide and numerous activities to escape the competitive criteria, the more wewill be able to spread the idea of winning new areas for public services. Eu-rope must be founded differently. The question of fundamental social rightsmust become central; a democratic, social Europe must be promoted, a Eu-rope of cooperation. This is very far from present policies.

We must be sure not to wage the wrong battle. The issue is to secure a newconception of European policy, not to push for a movement of disaffiliationof the states. Withdrawal from Europe by some countries carries major dan-gers of economic war and of the aggravation of nationalist tensions. Ratherthan leaving we must act together to build another Europe.

Gauthier/Crozat: But this requires creating a front against this pitting of na-tional working classes against each other and for another logic by drawingup, for example, a unitary and trade-union platform on the European level.Where are we with this?

Dumas: We’ve a long way to go. The social systems are very different and theway the trade unions position themselves in relation to their social systemsalso very different. France used to be regarded unfavourably because of its in-terventionist state and its social security. However, debates have arisen re-garding the arrival of foreign firms. In Germany and Sweden, etc. non-Euro-pean firms have set up shop and employ workers without applying Swedishor German collective agreements or conventions, since these firms are not af-filiated with the employers’ organisations that had signed them. In the end,the idea that collective agreements are dependent on the law rather than juston the relations between the employers’ and wage-earners’ organisations ap-pears to be a better protective arrangement. The question of the state’s rolein the negotiations and collective conventions has already begun to be raisedin a different way.

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sources, while on the other hand, different countries’ governments announcedraconian austerity measures in the name of public-sector budget deficits.Job-cutting plans proliferate, along with wage freezes or even wage cuts rang-ing from 7 to 15 % in countries like Ireland, Latvia and Hungary. At the sametime, directors and shareholders of banks and state-aided companies contin-ue to receive indecent bonuses and dividends. The so-called “moralisation” offinance is a delusion. This is seen as the worst recession since World War II.According to the ILO, the crisis could cause the disappearance of more than50 million jobs.

Gaining ground everywhere …

… is the idea that it is not up to the people to foot the bill for the crisis.This would, in fact, be double jeopardy. After having suffered for years fromimplemented policies, they now have to pay a second time: for the conse-quences of a crisis caused by these policies.

It is, therefore, not surprising that mobilisation is growing everywhere.Movements, often powerful, were underway in the period immediately pre-ceding the declared crisis: In 2007, in Portugal, in the face of deliberate dein-dustrialisation, tapping into pensions, deregulation of employment, a publicsector salary freeze, and assaults on the labour code, a united front ofunionised labour led to an important mobilisation: 70 % of workers re-sponded, directly or indirectly, to calls for a general strike in 2007. In France,the same year, the young turned out massively against a proposed First Em-ployment Contract (CPE), with the support of all workers’ representativeswith the result that this discriminatory proposal was withdrawn.

In 2008, labour struggles at Dacia in Rumania showed that workers in East-ern Europe refuse to be treated like second-class citizens. This time, signifi-cantly, they had the support of workers at Renault in France.

In April, 2008, after two months of strikes and mobilisation, German civilservants, along with workers in the metalworking sector, won a 5% increasein wages. Discontent only continues to grow, while the feeling of being madeto suffer the consequences of the crisis continue to feed the fury.

At the end of 2008, the young were the first to massively react in Greece.The vigour of the autonomous, anarchist milieu is not new within the stun-ning radicalisation of the movement, but it is not enough to explain it. Thechildren of the middle-class were in the front rank. The economic and finan-cial crisis has unleashed the anguish of this generation without a future, mas-sively affected by unemployment, precariousness and poverty. Greek youthcan take pride in the resonance of their movement throughout Europe. To-day, the root causes of their movement persist, and all are looking for the best

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Dominique Crozat reports on the various movements and protests allover the world. The characteristic of their outstanding breadth is the

merging of classical and new forms of resistance into a broad social move-ment.

This crisis is not a thunderclap in a clear sky. Its causes are deeply rooted inthe very contradictions of capitalism. These roots reach down into the sphereof production and out to the policies of employers and of government. Thedevaluation of the work force over a long period of time, the reinforcementof precariousness, assaults on social safety nets, the intensification of workand pressure on wages have played an important role in the financialisationof the economy. Weak consumption as a result of policies designed to mod-erate wages throughout the world make it impossible to resist the crisis andrestart the economy. These policies have weighed heavily on the people andon employment, and they have contributed to the disarray and discontent oflarger and larger segments of the population. Discontent has spread aroundthe world, to all countries and to sectors that had previously felt more or lessuntouched.

More recently, governments’ responses to the crisis only have served to ex-acerbate the anger. Billions injected into banks and large private companies,in exchange for nothing in return, are felt to be a true provocation. There isstrong feeling that governments are keeping afloat those responsible for thecrisis. On the one hand, the stability pact does not stimulate the owners of re-

Popular Movements Challenge Policies

Dominique Crozat

tional contract and signed separate accords with the employers. On October30, 2008, massive mobilisations and demonstrations in the education sectorprotested against a reform intended to eliminate thousands of schools. Thesecond assault came from the FIOM/CGIL metalworkers who rallied aroundthe slogan “The crisis should be paid for by those who caused it.” On Decem-ber 13, 1.5 million people demonstrated in defence of stable employment,wages and social justice. The strike of February 13, 2009 in metalworking andeducation was a success and 700,000 demonstrators gathered in Rome. OnApril 4, there will be a national demonstration organised by CGIL.

In Portugal, the social movement is gaining strength. A day of protest onbehalf of national education was massively supported in January, 2009. OnMarch 13, up to 200,000 workers from both the public and private sectorsmarched in Lisbon in the biggest protest of its kind the Portuguese capitalhas ever seen. The Socialist government was in the firing line, accused of in-creasing unemployment and favouring the rich at a time of crisis.

In Ireland, where unemployment grew from 4.7 % in 2007 to 9.2 % todayand where the state budget is being ruthlessly slashed, rage is mountingagainst the plan that the people are going to have to swallow while banks re-ceive massive aid. More than 120,000 people turned out in the streets ofDublin on February 21 to oppose the government’s cost-saving plan: fire-men, artisans who make porcelain and glass, teachers, policemen, civil ser-vants and workers from the private sector. According to the Secretary Gener-al of the Irish Congress of Trade Unions (ICTU), this was just the first stepin an ongoing action campaign. The solidly established social contract link-ing the state and the social partners has gone up in smoke. And, this situationis all the more worrisome for European authorities because the Lisbon Treatyis to be submitted to a new referendum in Ireland before October.

In Spain, mobilisations are still too sectarian and fragmented significantlyto affect the liberal orientation of the government. The crisis could, neverthe-less, still change that: On February 1, 20,000 people in Andalusia answeredthe call of the United Left and took to the streets of Seville to make clear thatworkers should not have to pay the cost.

In Germany, an alliance of almost 100 organisations, under the interna-tional motto of “We won’t pay for your crisis”, are calling for two big march-es in Frankfurt and Berlin. These marches are the beginning of further mo-bilisations and actions against the politics of the global crisis of capitalism.The struggles are becoming still more connected in the multi-organisationalcall for a week of action against the “crisis and war” on the 60th anniversaryof NATO.

In the United Kingdom, the government faces opposition from eightLabour-affiliated unions not in favour of privatising 30% of the postal serv-

way to prolong the movement of last December. There is growing awarenessthat it is neoliberalism that has shattered the future. In Athens, in Thessaloni-ki, popular assemblies have been created at the neighbourhood level, whilegeneral assemblies and coordinated meetings continue to take place.

The Greek €700 generation is related to the generation that fought againstthe CPE in France, to the Italian €1,000 generation and to the Mileuristas inSpain. Italy, Spain, France and Greece have, in fact, developed an economicand social model that sacrifices the young as a variable, as a safety valve, inthe labour force. Youth unemployment is particularly high in these countries– 18 % in Spain, 19.4 % in France, 20 % in Italy, 23 % in Greece – which ex-plains why the young are so mobilised in these countries against an in-equitable social model.

The same policies of restriction and austerity implemented throughoutEurope inspire the same protests everywhere. In France, in the face of grow-ing protest from secondary school students, Nicolas Sarkozy has put off im-plementing his reform of secondary school education for fear of provoking asituation similar to that in Greece. In November, 2008, all of Germany – and,particularly, Baden-Württemberg – was affected by strikes and demonstra-tions by secondary school students protesting the lack of professors, crowd-ed class rooms and lack of resources.

Apart from the young, more and more people are mobilising to say,“We re-fuse to pay for your crisis”. The arguments are still national, but European au-thorities fear that these movements will spread. So, they are multiplying re-pressive measures against those engaged in social protest. Common featurescan be seen everywhere.

In Eastern Europe, people who had seemed submissive are taking part in thelargest street demonstrations since the fall of the Soviet Union. Growth rateshave plunged brutally, and governments could think of nothing better than toslash jobs and wages to meet the demands of the IMF. In Latvia, popular mo-bilisation caused the government to fall. In Lithuania, too, thousands gatheredin front of the Parliament to protest the government’s austerity plan. In Bul-garia, social movements that express the fury of the people are proliferating.

In Rumania, at Dacia, again, 2,000 workers gathered to demand an anti-cri-sis plan from the government, including a plan to save the auto industry af-ter the announcement of the third suspension of production in four months.

Political analysts foresee a “hot Spring” in these countries and see this asonly the beginning.

In Italy, the government has managed to break decades-long union solidar-ity. The only visible opposition to the government, in a context of increasing-ly fragmented political parties, is that of the CGIL which has decided to breakranks with other Italian unions who had broken the tradition of a unified na-

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The motivation behind the mobilisations

No matter where you look, the motivation for mobilisation is the same:public freedom, rights and solidarity, austerity policies, public funds to bailout private finance and the wealthiest, while public services suffer and thepeople pay the cost of the crisis. No matter where you look, governments areon the line. The street holds them accountable.

There is a lot to learn from what is happening, especially from the youngGreek movement. Mobilisation developed outside traditional frameworksand structures, with new tools and new codes, often arousing the distrust ofthe traditional left. Horizontal lines of communication have allowed this re-volt to spread with unprecedented speed. New technologies, text messages(SMS), blogs and e-mail are overtaking traditional pamphlets and posters asmeans of communication. Virtual meetings on the internet preceded and ex-tended real assemblies.

Classic and new, often more radical, forms co-exist in these mobilisations,which, probably explains their breadth. Spokespeople are not necessarily or-ganised activists. This mobilisation is a phenomenon that is emerging fromthe true base of society. Unions often play an important role, but this role ischanging. This was evident in Guadeloupe where the people came togetherto answer the call of a collective of 49 union, political, consumer and cultur-al associations.

The ability of labour unions to take these new phenomena into considera-tion without trying to absorb the movement is critical to the social move-ment’s future development. This new dynamic challenges politicians of everystripe. If it is a clear condemnation of the liberal policies conducted by right-ist and social-democratic governments, the new dynamic also is a challengeto the forces of the left who want an alternative to liberalism. The left shouldtake a good look at what is in motion and emerging from society and workwith the social movement to build, together, the responses needed today.

ice, the last public service left in London apart from the Underground. Morethan a third (125) of Labour MPs have signed a petition against privatisingthe Post Office. Demonstrations against the employment of foreign workers,in connection with the Total refinery in early February, have underscored thepowerlessness of the authorities to deal with the crisis. Ironically, the authorof the slogan “British jobs for British workers” is Prime Minister GordonBrown himself! The adoption of the slogan by British strikers and the Uniteunion is certainly shocking and xenophobic, but it does reflect the unease ofa working class faced with the threat of social dumping in other countriesand, in the present context, is part of the same unwillingness to underwritethe crisis that is being expressed throughout Europe.

In France, mobilisation is growing. In a departure from the past, the com-mon front of the eight main unions, while still fragile, is not cracking. Aftera day of massive mobilisation against having to pay for the crisis (January29), the eight main unions have issued a new appeal: on March 19, three mil-lion people took to the streets in new demonstrations against President Nico-las Sarkozy’s handling of the economic crisis. According to polls, the ralliesare backed by 75 % of the French population. They reflect growing disillu-sion. Rage extends to sectors that, until now, have not tended to react.Teacher-researchers are exceptionally well mobilised. Judges and psychiatristsare reacting to security-oriented imprisonment policies and threats to civilliberties. A “Call of Calls” has been issued to further the convergence of dif-ferent movements.

The socially lowest strata, people historically enslaved and colonised, im-migrant workers, also are waking up. In Martinique and Guadeloupe therehave been historic mobilisations, lasting several weeks in early 2009, andspreading to the island of Reunion and to Guyana. In Guadeloupe, 100,000people, nearly a quarter of the population, took to the streets to protestagainst “robbery and abusive profits.” Their demands extend across all seg-ments of society. Undocumented workers also went on strike for many weeksin 2008 and, for the first time, received wide support from the population.

These mobilisations are creating the conditions for a convergence of thestruggles in Europe. In early March, the European Trade Unions Confedera-tion (ETUC) launched a campaign for European protest against the crisis, re-fusing to see workers and citizens pick up the tab for a crisis that they did notcreate. This campaign will see a series of European demonstrations on May14–16, 2009. ETUC calls for a social agenda that gives priority to the mainconcerns of European citizens: jobs, purchasing power and basic rights. Thecampaign is to remind different European governments of their responsibil-ity in the crisis.

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di (centre-left Christian Democrat) with the billionaire Silvio Berlusconi.Worse still for the socialists, after the election of April, 2008, the Party of Eu-ropean Socialists (PES) – the organisation that groups socialists, social-de-mocrats and labour in Europe – no longer is represented in the Italian Par-liament. The Democrats of the Left, who emerged from the old Italian Com-munist Party in 1992 and who belonged to the Socialist International, chose,with Margherita (once the left wing of the Christian Democrats) to create theDemocratic Party. A debate is underway in this party over its internationalaffiliation, with a large group within the party leaning more toward adhesionto the Liberal and Democrat Alliance for Europe (ALDE). Francesco Rutelli,one of the leaders of this party, is one of the founders of ALDE.

When the left is in power, it often is as part of a wide coalition or withoutan absolute majority in parliament or at the polls. A case in point is Austria,where the Austrian Social-Democratic Party stays in power in alliance withthe Austrian People’s Party (ÖVP, right), which should not obscure the factthat it scored its lowest number of votes in more than a century. The Bulgar-ian Socialist Party (PSB) of Prime Minister Sergei Stanichev came to powerin 2005 with only 35 % of the vote, which led to an alliance with two groupsaffiliated with ALDE in Europe: the party of the preceding Prime Minister,the National Simeon II Movement (19.9 %), and the Turkish minority’s par-ty, the Movement for Rights and Freedoms. In Cyprus, the only country inthe EU led by a communist party, the Progressive Party of the Working Peo-ple (AKEL) is only in power thanks to the election of Dimitris Christofias tothe Presidency in the context of a presidential regime. In Parliament, the ma-jority is composed of Socialists (8 %) supported by one of the parties on theright. In the United Kingdom, the Labour Party owes its parliamentary ma-jority to a one-round, plurality voting system which transformed 35 % of thevote into 54 % of the seats (355 out of 646).

On a European scale, the Party of European Socialists (PES) seems to belosing ground. It has won 32 % of the vote over the period under analysis. Itis the most coherent political formation. There usually is no more than onemember-party per country, which is not the case with rightist groups like theEuropean People’s Party (EPP) and the Liberal and Democrat Alliance forEurope (ALDE, centre-right), which sometimes have two or three member-parties from each country. On average, in legislative elections that took placebetween 2004 and 2008 in the 27 EU Member States, socialists won 32 % ofthe vote (27.5 % without Italy’s Democratic Party). There were only fourcountries where more than 40 % of the votes went to the socialists. In threeothers, they won more than 35 %. This may mean that centre-left claims incertain countries like France and Italy that “European normality” resides in a

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This article was written based on results of legislative elections in the 27countries of the European Union over the period 2004 to 2008. It allows

an overview of the different political forces in play on the eve of elections forthe European Parliament which will take place on June 4–7, 2009. This“score-card” analysis is instructive on at least two counts: European SocialDemocracy appears weak. And, attempts at “political normalisation” in thename of a two-party system seem to be illusory. Europe remains the conti-nent of political pluralism.

It’s hard to be a social democrat…

In 1999, 12 out of 15 governments in what was then the European Union(EU) were led by socialists or social democrats. Today, the count is four outof the Europe of 15, seven, when the 12 countries that have become EUMember States since then are included. With Cyprus, which is led by a com-munist, only eight out of 27 governments are leftist. 2007 was a dark year: nota single victory for the left in a national legislative election. All rightist ma-jorities were re-confirmed that year. In 2008, rightist majorities were re-con-firmed in every country where they had been in power, with the exception ofSlovenia.

Last year, two leftist governments saw themselves replaced at the polls bygovernments of the right. Lithuania voted right. Italy replaced Romano Pro-

Parliamentary Elections in 27 EUCountries: A Score-Card

Gaël DeSantis

Czechoslovakia where 60 % of the votes won by this group of parties comesfrom the left, 24 % from communist parties and 16 % from coalitions wherethe communist party is the most important force (Italy, Spain). Elsewhere, tothe left of the GUE, far left parties have won 0.5 % of the vote in differentelections. Far left forces are strongest (3.4 %) in France, followed by Italy(1.7 %) and Portugal (0.9 %).

Political groups on the left, therefore, won 41 % of the vote (GUE, PES,Greens and far-left), versus 48 % for the right (EPP, ALDE, centre-right).Forces allied with the rightist EPP obtained 38 % of the vote. Those that ad-here to the Alliance of Liberals and Democrats for Europe (ALDE) or to theEuropean Liberal Democrat and Reform Party (ELDR) count for 9.5 %. Var-ious parties not affiliated with the centre right have 0.5 %. It seems as though,in certain countries, the right is capable of alternating power within itself.This is what happened in France with the election of Nicolas Sarkozy in 2007.In Latvia, the first government to fall because of the current crisis was re-placed by another rightist government, after demonstrations of a size unseensince the fall of the Soviet Union but in the absence of any election.

Parties of the right lead after elections in 15 countries and come in secondin 11 other countries.6 In 21 countries, the right constitutes two of the threebiggest parties. In the Baltic countries, the top three parties all are parties ofthe right.

Finally, populists and movements for sovereignty have won 7.5 % of thevote. Parties close to the Alliance for Europe of the Nations (AEN) fall intothis category and have won 4 % of the vote. And parties of the far right, likethose of the Independence/Democracy (IND/DEM) eurosceptic group, havewon 3.5 %. If 7.5 % seems low, there are wide variations, depending on themember-state. In some countries, the forces of the AEN come in second(Poland) or third (Italy, Lithuania). In Austria, the third largest political forceat the polls is the Freedom Party of Austria (FPÖ), with 17 %, followed by theAlliance for the Future of Austria (BZÖ) with 10.7 %, both on the far right.

Two-party systems do not yet prevail

Of all the countries, Malta is the temple of the two-party system. The coun-try’s two main parties win 98.1 % of the vote! The Greens make do with1.3 %. Parties of the radical left blame the two-party system for their difficul-ties. In fact, when the centre left calls for a “useful” vote, the result does notfavour the left as a whole, which remains weak. Still, other political familiesdo not seem to suffer from the system.

The main political forces call for a two-party system in the name of effi-ciency in order to make electoral rules evolve to their advantage. This was the

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broad leftist force of 35 % do reflect reality. But only 13 countries have a so-cial democratic force of more than 30 %. Moreover, if the northwest Balticcountries have been cited as a Social-Democratic model (even if social de-mocrats no longer are in power in these countries), the southeast Balticcountries appear to be a black hole for the socialists. They scored less than15% in Poland (13.2 %), Lithuania (11.7 %), and Estonia (10.6 %) and theyhave only a slight presence in Latvia. Outside this zone, the PES is weak inIreland (10.13 %) and Cyprus (8.9 %). In the latter country, AKEL (Commu-nist) is the leading force. PES parties are the first political force in nine coun-tries and the second in nine others. In the rest, they are either in third placeor far behind.

Other political forces

Potential allies on the left for national PES parties are weak. Parties that be-long to the Greens-European Free Alliance in the Strasbourg Parliament won3.5 % of the vote in their national legislative elections from 2004 to 2008.

The European Free Alliance (EFA), which groups regionalist or independistforces and ecology parties, obtained 3 %.

The forces of the United European Left Group (GUE), the European LeftParty and the communists won 5 % of the vote over the period. They nolonger participate in national governments. Forces that have tried in recentyears – Rifondazione Comunista in Italy (until 2008) and the French Com-munist party (between 1997 and 2002) – have lost influence. Generally, elec-toral surges for this group come from factions that have not yet been part ofa government. GUE won the most votes in: Cyprus (AKEL with 31.2 %); theNetherlands, more than 10 % (16 % for the Socialist Party); Denmark (withthe People’s Socialist Party at 13 %), and in the Czech Republic (the Commu-nist Party of Bohemia-Moravia won 12.8 %). In Greece and in Portugal, twoimportant parties ran separately. In Greece, the Communist Party won 8.1 %and the Syriza coalition 5% in legislative elections in 2007. In 2005 in Portu-gal, the Portuguese Communist Party won 7.5 % and the Left Bloc (Bloco deEsquerda) 6.3 %. The United European Left Group therefore won more than10% in six countries and more than 5 % in four others (Finland, Germany,Ireland and Sweden). In Germany, there is Die LINKE („The Left“), a fusionEast German post-communist and the Electoral Alternative for Social Justice(WASG) which split off from social democracy.

As the forces of social transformation take root, their political incarnationis diverse. In Northern Europe, there is the Nordic Green Left Alliance(NGLA) In Latin and Hellenic Europe, communists predominate in theGUE, as the most recent elections have shown. The same goes for the former

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case when voting reform was implemented in Italy this year. And it was thecase for regional and European Parliamentary elections in France under thegovernment of Jean-Pierre Raffarin.

The fact remains that this type of two-party system is at least partially afantasy. Often cited as an example, the UK model does not reflect the realityof the country, given the rise of the Liberal Democrats. In this country, withone-round majority voting, which is supposed to favour a perfect two-partysystem, the Liberal Democrats have won 22 % of the vote, while the two mainparties only scored 67.6 %. More generally, in the EU 27, there are only eightcountries where the two main political forces obtain more than 70 % of thevote; more than 60 % in only 15, and less than 50 % in five. The norm seemsto be between 50 and 70 % for the two main political forces. This is the casein 14 EU member-states.

The two-party system, therefore, has not yet won the day. In most cases,there is plenty of room for parties other than those that dominate the polit-ical scene. The question is to know why the left-wing of social transforma-tion does not manage to occupy the available space.

Notes

1) The Republic of Cyprus is a special case, where the question of nationhood predomi-nates: Turkey has occupied 40% of the island’s territory since 1974.2) When more than one election took place during the period, the most recent serves as areference.3) As pointed out above, the Democratic Party has not yet formally chosen whether to af-filiate with the Party of European Socialists (PES) or with the Liberal and Democrat Al-liance for Europe (ALDE). Since most of the troops come from the Democrats of the Left(DS) which represented between 20 and 26% of the vote in recent years, we have opted, forthe sake of convenience, to include this party in the Socialist family.4) Countries where the Socialists won more than 40% of the vote are Hungary, Malta, Por-tugal and Spain. Countries where the forces of the PES won more than 30% are: Bulgaria,the Czech Republic, Germany, Greece, Hungary, Italy, Malta, Portugal, Rumania, Slovenia,Spain, Sweden and the United Kingdom.5) In Spain, for example, there are the Galician Nationalist Bloc and the Republican Left ofCatalonia. The Association for Human Rights in a United Lithuania includes Russophones.The Scottish Nationalist Party and the Plaid Cymru (Wales) also belong to this group.More generally, regional forces or those that represent minorities are spread throughoutdifferent groups (Unified European Left Group, European People’s Party, ALDE, etc.)6) Counting parties that belong to the Alliance for Europe of the Nations (AEN).

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Returning home 12 o’clock at night, two days before last Christmas, 42-year-old Konstandina Kouneva, cleaning worker, trade-unionist, single

mother of an 11-year-old boy and immigrant from Bulgaria, was the victimof an assassination attempt by means of acid thrown at her face, head, leftshoulder, and subsequently inside her mouth. She spent 45 days in the inten-sive care Unit of Evangelismos Hospital in Athens, and then was moved to thesemi-intensive care unit.

Kouneva was the victim of employers’ terrorism, as she was the GeneralSecretary of the Attic Union of Women Cleaners and Home Personnel(Greek initials PEKOP), which was fighting under terrorist conditions to de-fend workers rights. Being an immigrant, she was especially exposed to theterrorism rampant in the cleaning and subcontractors sector, and had repeat-edly been threatened by anonymous phone calls. Her colleagues in the lead-ership of the trade-union denounced the attack as a crime coming from thecamp of the employers, and even Kouneva herself had the courage to screamin that horrendous night, chasing her attackers while the acid was burningher face and head, that “They did it because of my trade union activity”.

Solidarity

PEKOP’s press release of December 25, 2008, Christmas day, stated: “Kon-standina and the Cleaning Women’s Union have been insistently trying in the

The Ugliest Face of Neoliberal Employers

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to no more than 150 active members in 2008. A company, stooge trade-unionwas created in the meantime, in 2004, by the major employer of the sector,OIKOMET (who was also Kouneva’s employer), which added to the intimi-dation of the members of the militant cleaners trade union and of the work-force.

Upper strata trade-unionism

We could add here that there are 40 unions in the cleaning sector alone.The number of trade-unions in Greece is huge: there are 70 federations in theprivate sector (belonging to GSEE) and 45 in the state sector (belonging toADEDY). There are also 82 Labour Centres in the country, connectingunions by geographical areas.

PEKOP was a member of the Labour Centre of Athens and of the Federa-tion of Private Employees of Greece.

The employer’s trade-union has been trying to register with the LabourCentre of Piraeus, and was also connected with PASKE. It was often invitedin official tri-partite negotiations with the Ministry of Labour to “represent”workers. It has many hundreds of active members (meaning the number ofvoting members), obligated to the employer who wants to avoid their work-ers’ organisation in any independent trade unions.

The trade-union movement in Greece is strong in the sectors of state em-ployees, teachers at all levels, public companies (many of which have beenprivatised or are in the process, or under threat, of privatisation), banks, hos-pitals and airports. When decisions are taken to organise an action, they mo-bilise part of the membership, rarely the whole workforce. In the private sec-tor the movement is weak, mainly in terms of mobilisation potential. Nomore than 28% of employees are unionised in both private and public sec-tors, while the percentage differs between men and women, especially in theprivate, the latter being less organised in trade-unions since they are in theweakest positions and the movement is male dominated and present mostlyin big companies and the public or state sector. Trade-union density inGreece is lower than the median in Europe.

The General Confederation of Labour (GSEE), with a PASKE majority inits leadership, is indifferent to the new strata of workers in the flexible andderegulated sector, again mostly women. According to official calculationsunemployment is 9%, while in gender distribution women’s unemploymentis about 16%, and men’s about 7%. The double figure of unemployment forwomen has held for more than 16 years now. This reflects the official sectorof the economy, while the unofficial sector, the black economy, is estimatedto be about one third of the total. Needless to say, most immigrants, who are

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last few years to pull the curtain and expose everything that is hidden behindoutsourcing contractors, especially in the public sector. Silence!! The state issleeping and does not understand! The leaderships of the institutions, com-panies, hospitals, sleep and do not understand! The official trade-unionismdoes not understand! Small and big crimes are committed every day, humanrights are violated as well as human dignity, and nobody understands. All ofthem answer in the same way, the minister, the director of the hospital, thepresident of the institution, ‘It does not concern me’.”

A strong movement of solidarity emerged a few days after the attack, fromall kinds of political groupings – trades unions, women’s organisations, im-migrant groups – demanding first and foremost that the attackers as well astheir instigators be found and indicted, and secondly demanding trade-union rights, especially of the most vulnerable sectors working for subcon-tractors (outsourcing) of the public and private sector.

The Feminist Initiative for Solidarity with Konstandina Kouneva said in itsleaflet: “It is certain that Konstandina Kouneva, being an immigrant, waschosen to pay the price for her courage to speak out publicly and demand ba-sic workers rights for herself and her colleagues. The unprecedented mannerof her ‘punishment’, with obvious archaic and sexist connotations, points toa dark world of inconceivable savagery, whose laws impose the literal rav-aging of the face and stifling of the voice of a woman who dared to disobey.On this question, the responsibility of the competent state institutions as wellas those of the official trade unions are incalculable.”

Struggle against terrorism

The heart of the matter is the total arbitrariness of the companies supply-ing outsourced work like cleaning, security and others. Any breaches oflabour law, even with its minimum standards, is common, while the fear ofunemployment of the most exploited and unskilled workers makes them ac-quiesce to any trampling of workers rights, hours, payment, overtime and so-cial insurance stamps.

The cleaners trade-union was quite unusual in the context of today’s work-ers rights ethics. Created in 1999 and covering a broad geographical area withmany companies or individual employers, it grew to 1,700 registered mem-bers by the middle of the present decade with 600 to 700 active members(voting in the elections of 2006). It was connected with PASKE, the majorityfraction in the trade-union movement (allied with the PASOK party). Theunion subsequently weakened, due to employers’ terrorism, distanced itselffrom PASKE’s umbrella and protection, because of PASKE’s lack of supportfor it, and followed a more militant path incompatible with PASKE. It shrunk

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and carried out by some small unions of precarious workers and by anarchistand autonomous political forces, but it was embraced by many “disobedient”workers and youth who participated in its activities.

Their statement said:“We, the manual workers, clerks, unemployed, precarious, both indigenous

and immigrants, who are not television consumers and who are taking partin the clashes with the police, the occupations of the Centre and of neigh-bourhoods since the assassination of Alexandros Grigoropoulos (…), havedecided to occupy the GSEE building in order to turn it into a space of freeexpression and a meeting place of the workers.”

“We have done this to counteract the myth promoted by the media that theworkers have been and still are absent from the clashes and that the rage ex-pressed in the last few days is the work of 500 ‘hooded’ ‘hooligans’ and oth-er fairy tales, while the television presented the workers as victims of theclashes, at the same time as the capitalist crisis in Greece and all over theworld is leading to hundreds of thousands of dismissals which are reportedby this very media as a ‘natural phenomenon’.”

The assassination attack came only a few days after all this, while the oppo-sition, protest and solidarity was still burning with the December fever. “Acidon the face, bullets fired to kill, we are living in war, each and every day” thiswas one of the slogans in the many demonstrations organised for Kounevaduring January and February, showing the way the connection of the twomajor repressive events was perceived.

Reaction and action

The first major reaction to the attack on Kouneva was the two-day occupa-tion, beginning on December 27, of the headquarters of the public city traincompany, HSAP, for which Kouneva, employed by the subcontractor, wasworking. It was organised and carried out by anarchists, autonomous leftists,the Network for Political and Social Rights and others. Subsequently, severaldemonstrations were organised, by various political and autonomous forcesand by feminists, while local committees were created for systematic solidar-ity work in many parts of Athens and throughout the country.

One initiative in Athens, based on four small trade-unions formed in midJanuary, co-ordinated several actions and very soon grew through the inclu-sion of other rank-and-file unions, also in collaboration with the leadershipof PEKOP, Kouneva’s union.

Another committee formed in Athens on January 17, comprising trade-union cadres, social movements, immigrants and feminist groups in the formof a social forum also coordinated actions and participated in actions organ-

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at the bottom of the scale of skills, wages and rights, have a far greater per-centage of participation in the super-exploited black economy. Immigrantsin Greece are calculated to be more than 13% of the labour force.

Neoliberal deregulation

Deregulation of work conditions is thriving in Greece, as everywhere un-der neoliberalism, and there is a series of relevant laws enacted from1985, the“good” days of PASOK, to the present. All these laws were voted in Parliamentby PASOK (in the 19 years of its rule) and New Democracy (the party rulingsince 2003). As a consequence of PASOK policies and the process of neolib-eralism of which PASOK was the champion, the trade-union movement wasgreatly weakened, with workers becoming hostile to state trade-unionism ex-pressed for many years by the trade union fraction related to PASOK. Thetwo parties of the left, SYRIZA (formerly SYNASPISMOS) and the Commu-nist Party have, in the course of all these years, voted against all the laws pro-moting deregulation, flexibility and flexicurity. Despite this, their trade-union alliances and fractions have not established any systematic policies thatwould support in practice the new layers of flexible and deregulated workers,and no serious moves have been made toward unionisation of the new pro-letariat, which we call the precariat. Ideologically, decades ago, part-time andflexible work was at first supported, using the “argument” of the reconcilia-tion of family and work for women. This excuse is never absent from thepublic debate, since the “role” of women, as we know, is first and foremost“sustaining the family”. Today it is no longer only women who suffer thesekind of work conditions; the deregulated, part-time and flexible sector is ex-panding, and, if the present tendency continues, it will not be long before itoutstrips the regular work force in dependent employment.

As a result of the indifference of official trade-unions, of their male domi-nation and of the neoliberal process, this new proletariat, mainly women,young people and immigrants, are at the mercy of the employers, indeed ina period of rising unemployment.

In the spirit of December

This horrendous employers’ attack stirred up a dormant potential whichemerged in December, during the youth revolt in various ways, including butnot limited to the occupation of the building of the General Confederationof Labour on December 17. Many trade-union leaders were thrown out oftheir offices, and there was a five-day occupation with assemblies, activities,cultural events, discussions and planning. This occupation was organised

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Nevertheless, shock therapy is also necessary to wake up the “secure” andinsecure work force. Acts like “civil disobedience”, aimed at the trade-unionorganisation and bureaucracy could create a different climate and bringabout a regeneration of the trade-union movement which is at present sleep-ing and bureaucratic, male dominated and, in its own way, part of the estab-lishment, due of course to its leadership or to the majority of it.

The connection in real terms of the social movements to the immigrantsmovements and communities within this struggle is an absolute necessity. Itdeveloped to some extent in the course of this recent struggle and it coulddeepen and produce mass mobilisations in the future. In any case, the hard-core working class in Greece at present are the immigrants, who are at thebottom of the barrel, and no real breakthrough in the trade-union move-ment can ever take place without the unity of indigenous workers and immi-grants.

This could become the other side of the coin of increasing racism andxenophobia, which is leading sections of the native working class, and poorlayers more generally, into the arms of the extreme right. Under conditionsof intensification of the economic crisis, such struggles are the only progres-sive way forward.

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ised by others, while at the same time working inside larger trade-unions forsolidarity and for confronting the problems of flexibility and employers ter-rorism.

Meetings all over the country were organised by left forces, in order to sen-sitise the broader public, collect solidarity money and organise relevant ac-tions on the spot.

All of this consciousness-raising and the mobilisations could not have oc-curred if it was not for the December youth revolt, which was a spontaneousresponse to police brutality and the bleak future of the younger generation,especially of teenagers, made desperate by the educational system and thework insecurity awaiting them after school or university, who encircled po-lice stations from one end of the country to the other, demonstrated andfought in the streets, occupied public and trade-union buildings, media, the-atres and the concert hall. An “invisible” section of society occupied the pub-lic space with various radical activities, without being directed by anyone,challenging the system in many of its forms.

The spirit of December has been expressing itself in a more organised wayin the wave of solidarity with Kouneva, which confronts the issue of workderegulation, flexibility and unemployment.

What is the next step?

Deregulation and unemployment is everywhere. It is easy to become paral-ysed and not to know where to begin in the face of the magnitude of the phe-nomenon. And yet, innovative actions were invented and articulated, ex-pressing solidarity and creating mobilisation – like mass presentations andprotests in front of the Ministry of Labour, in front of the office of the sub-contracting company that employed Kouneva, in front of the city train com-pany for which Kouneva was working, many trade-union meetings in publicand state companies for sensitisation and addressing the problem of out-sourced personnel, creating interest and solidarity.

The question that arose and needs to be answered, is how to proceed andhow to create new collectives, unions, strengthen the existing ones, how tocreate bonds among workers that will help them overcome their fear. Sever-al tactics emerged in the last two months, one being the aggression and theshow of force (which was a minority strength) and the other the building ofthe solidarity of the “secure” and regular work force, especially in the publiccompanies where the actions are taking place, and the use of the strength ofregular and unionised workers in helping those who are non-unionised andexposed to employers’ threats. This second path is likely to help strengthenand broaden the Women’s Cleaners Union.

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isations quickly joined the LKP. All segments of society in Guadeloupe areparticipating, except for those who share political power, the Union for aPopular Movement (UMP, the French ruling party) and the Socialist Party(PS). The LKP represents a level of mobilisation that involves all of civil so-ciety. It functions democratically. All decisions are debated by the 49 organi-sations. The collective is holding together despite differing points of view.There is a call for a general strike January 20, 2009.

Historic mobilisation

The struggle against “pwofitasyon” has led to an historic mobilisation at theheart of society as a whole in Guadeloupe. What led to this federation was thefeeling of injustice, the poverty suffered by the majority. In everyday lan-guage, “pwofitasyon” means the abuse of power that the powerful practice onthe weak, in order to make them even weaker. It is a question here of all theabuses laid on the backs of the people by the political authorities, the giantsof mass distribution, and the big “béké” industrialists, descendants of slaveowners, who have been able to preserve their domination of the economy.

The demands constitute a veritable indictment motion that covers ab-solutely every aspect of society: the high cost of living (as much as 100 %higher than prices in France), education, professional training, union rightsand freedom to organise, public services, environment, agricultural produc-tion, urban and rural planning and infrastructure, culture and, finally,“pwofitasyon” (with demands for measures to control prices from now on).The media have focused on demands for an increase of 200 Euros (for thelowest salaries) but have ignored the other demands and the degree of au-thenticity this social movement has.

In answer to the call of the LKP, demonstrations drew 100,000 people, outof a population of 460,000, all linked by “Liyannaj”, the concerns that theyshare, regardless of age. When the strike was settled, LKP representativeswent to negotiate accompanied by large crowds of demonstrators with whomthey shared the content of all discussions.

The people of Guadeloupe organised themselves. Popular marches allowedfishermen and farmers to sell their products. Never before has so much localproduce been consumed locally! Nicolas Sarkozy and his government havetreated the struggling people with total disdain. They ignored the movementand remained totally silent for nearly fifteen days!

There were efforts to discredit the movement by calling it racist when itclearly is not. Certainly the weight of colonial and slave-owning history canbe felt. The society is pyramidal and the higher you go towards the top of thepyramid, the lighter complexions become.

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The victory obtained by the people of Guadeloupe, united against the ex-ploitation and injustice that they have endured, shows that it is possible

to find a way out. To do so, it is necessary to dare to move forward in a dif-ferent way.

Alliance against abusive profits

On December 5, 2008 at the initiative of the General Workers’ Union ofGuadeloupe (UGTG), the country’s leading trade union, a first unity meet-ing took place in Guadeloupe.

On December 16, 2008, 7,000 people answered the call of 31 union, polit-ical and social associations to march in the streets of Pointe-à-Pitre againstthe high cost of living. The Préfet (top government official appointed by theFrench government) refused to receive the leaders of the organisations. Butthe movement is underway. A platform of 146 demands was drawn up by thecollective, which has taken the name Liyannaj kont pwofitasyon (LKP), liter-ally “Alliance Against Abusive Profits”. The name expresses the goal of the col-lective and, at the same time, its determination in the face of exploitation.The LKP brings together the unions but also cultural movements and asso-ciations of tenants, consumers, defenders of the environment, and anti-colo-nialist political parties like the Communist Party of Guadeloupe and thePopular Union for the Liberation of Guadeloupe (UPLG). Forty-nine organ-

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The slogan taken to heart by the demonstrators: “La Gwadloup sé tan-nou,la Gwadloup sé pa ta yo. Yo péké fè say o vlé, adan péyi an-nou” (“Guade-loupe belongs to us, it does not belong to them. We will not let them do what-ever they want in our country”) expresses the rejection of Guadeloupe as asimple market where anyone can do whatever they want with impunity, aplace where the law does not apply. “They” refers to the “profiteers”, those re-sponsible for the pwofitasyon. As for “us”, it augurs something completelynew: the strength and recovered pride of the people of Guadeloupe who havejoined forces in order to effect change.

Formidable victory

After a six-week strike, the people of Guadeloupe won a formidable victo-ry. On March 4, 2009, the LKP signed an agreement that contains 165 articlesand reflects the progress achieved on the 146 initial demands. An annex con-tains the agreement that provides for a € 200 increase for low wage earners.

Government and employers are multiplying their manoeuvres to weakenthe scope of the successes won by the people of Guadeloupe. The MEDEF haslaunched an attack on the 200 Euro increase.

Even though the agreement concerned was signed in the presence of thePréfet and state mediators, the government, under pressure from theMEDEF, is playing a double game. It has declared that the state does not sup-port the protocol of the agreement. Bolstered by their six weeks of struggle,the wage earners of Guadeloupe are determined to do whatever is necessaryto ensure that every company implements the agreement.

The government turn-around is part of a counter-offensive that includesthe opening of a legal investigation of the LKP spokesman, on grounds of in-citement to racial hatred and extortion. The theme of ostensible anti-whiteracism is exploited to discredit the movement. This legal summons reflectsthe will of Nicolas Sarkozy and his government to take revenge and also tointimidate those in Guadeloupe who dare to stand up.

Today, the foundation of society in Guadeloupe is on the move and themovement shows no sign of subsiding. Dysfunction and injustice have beenexposed to the light of day. Feelings of powerlessness and fatality have beendisparaged. Faced with the indifference and disdain of the political powers,the society has taken its problems in hand and shown its ability to resolvethem. The people of Guadeloupe know this. That is how they have been ableto recover all their dignity.

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Contradictions of Soviet Marxism and post-Soviet Marxism

Unfortunately, after the collapse of the USSR, Russia became a semi-pe-ripheral country in many ways: economically, politically, and socially – andalso theoretically. For left scholars this situation was extremely dramatic, be-cause we suffered (and in many ways still are suffering) from a double op-pression: We are very oppressed by mainstream neoliberal ideology and the-ory and we are very isolated from Western Marxism and other left theories.Moreover, we had the very contradictory legacy of Soviet “Marxism-Le-ninism”.

At the same time we had some positive ingredients for a successful devel-opment. The most important among these were the creativity found in theworks of critical, anti-Stalinist Soviet Marxism developed by scholars whoare not well-known in the West (such as Evald Ilienkov, Mikhail Lifshitz andothers).

On this basis, and on the basis of the modern limited albeit existing dia-logue with Western colleagues, a school of post-Soviet critical marxism wasdeveloped during last seventeen years.

The organisational basis for us is mainly the left theoretical quarterly “Al-ternatives”, published regularly for more than seventeen years now, and theRussian Social Movement (which supports “Alternatives”’s social initiatives),integrated very closely with other new social movements in the framework ofthe Russian Social Forum.

Post-Soviet Critical Marxism

The Systemic Crisis of Capitalism and a New Understanding of Global Prerequisites for Socialism of the 21st Century

Alexander Buzgalin

in particular are impossible (this thesis, which was already stressed by Lenin,has only a very pale reflection in present-day Marxism, which often forgetsthis question).

The key parameter and measure of development of the new society is nolonger the replacement of private by state ownership, but the process of freeassociation (the self-organisation of citizens and their self-management), de-ploying people’s social creativity in all its diversity of forms (from innova-tions by a trade union activist or teacher, through the activity of mass dem-ocratic organisations, to the revolutionary transformation of society). So, so-cial associated creativity is the only really dialectical manner of negation ofthe “realm of necessity” and alienation as the general form of its existence.

Modern global crisis: Russian “capitalism’s Jurassic Park” as caricature of modern world capitalism.

On the basis of the method outlined above we analysed, in particular, theessence of the modern world crisis as both (1) a capitalist crisis and (2) thecrisis of the capitalist model of sunset of the “realm of necessity” as a whole.At a lower level of abstraction the elements of the crisis are:

First, new specific forms of over-accumulation of capital (the main reasonfor the crisis in capitalism), interconnected with financialisation, deregula-tion and the development of the production of various fictitious goods(“simulacra”).

Second, the crisis of the attempts of “late capitalism” to find efficient andadequate forms of development of post-industrial technologies, “knowledgesociety” and the solution to global problems.

This crisis has assumed extremely brutal forms in Russia, which has be-come capitalism’s Jurassic Park, a caricature of the world’s capitalist crisis.

These ideas, among others, will be presented in the March 4 seminar at Es-paces Marx at 4 pm.

Abstract of talk given at a seminar organised by Espaces Marx, March 4, 2009.

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Our school is characterised by its adhesion to the well-known principles ofsocialism (as a new type of society, personality and development), democra-cy (with an emphasis on grassroots democracy, human rights and on socialmovements as institutions of self-management, and also on economic self-management) and internationalism. Of course, our orientation is based onthe dialectical analysis of the Soviet system, which had very deep contradic-tions, but not only negative features.

All this is simple and not original for the West, but in Russia this is some-thing special.

Main theoretical ideas of the school

From our point of view the material preconditions for the birth of a newsociety are interconnected with a negation of the whole world of alienation,in all its forms, not only capitalism. Within the context of this problem, over-coming two limited approaches to the analysis of such preconditions takes onfundamental importance. Analyses of the society of the future as “anti-capi-talism” (Stalinism) and as reformed capitalism have both outlived their use-fulness. At the same time, both these approaches contain positive aspects.Capitalism needs to be removed through the unity of a qualitative, revolu-tionary negation (of exploitation and so forth), and of succession (of mate-rial and intellectual culture).

From this stems a conclusion which is rarely stressed even by modernMarxism: the left is faced with the task of doing away (by means of both re-form and revolution) not only with capitalism, but also with the whole soci-ety of alienation, and with all the forms and mechanisms of alienation.

The preconditions for such a new society (“the realm of freedom”, the post-economic world,“communism”), extend far beyond the process of the social-isation of production and the development of the class of wage workers. Theminimum requirements include:

l the shift to the predominance of creative activity; the creation of a worldof culture, and the consigning of material production to a secondary level;and the shift to a dialogue with nature and to a “nous-sphere” type of devel-opment;

l the development of various forms of association of workers and citizens;the development of their capacities for social creativity, and of their experi-ence of transforming social relations (their experience in the struggle fortheir rights, for self-organisation and so forth, for the development of their“social muscle”);

l the accumulation and mastering by working people of the wealth of hu-man culture, without which creative activity in general and social creativity

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Ruurik Holm is research director at the Left Forum and legal representativeof transform! europe Network.

Anders Lundkvist teaches political economy at Copenhagen Business Schooland at Aalborg University. He is a member of Attac Denmark and of theSocialistic People’s Party (SF).

Jirí Málek is a member of the Society for European Dialogue (SPED) inPrague, Czech Republic.

Gustave Massiah is a French economist, urbanist, and political analyst. Hewas a professor of urbanism at the French Ecole spéciale d’architecture inParis, as well as the director of the CRID (Centre de recherche et d'infor-mation sur le développement). He is one of the founders of Attac France,and a member of its managing board.

Luisa Morgantini is Vice President of the European Parliament.

John Neelson is professor of politcal economy at the University of Tübingen/Germany.

Krzysztof Pilawski is a left journalist living in Poland. He writes for variousmagazines and newspapers. In the 1990s he was correspondent in Moscowfor a Polish magazine. He is studying philosophy in Kiev. 2005 he publishedthe booklet “Skad sie biora komunisci” (Where do the communists comefrom?).

Rosa Reitsamer is a sociologist, journalist and DJ. In 2008 she published to-gether with Marina Grzinic the anthology “New Feminism. Worlds of Fem-inism, Queer and Networking Conditions”. Currently she is working on areasearch project on the contemporary popular music scenes in Viennaand is writing her Ph.D. thesis on careers of DJs.

João Romão is the coordinator of the Portuguese edition of transform! europeMagazine, a member of the board of Cultra (Cooperative Cultures ofLabour and Socialism), editor of Esquerda.net (the website of Bloco de Es-querda) and an economist specialising in local and regional development.

Emmanuelle Reungoat is a Ph.D. student in political science at the Universi-ty of Paris I, and a member of the board of the Fondation Copernic(France).

Hélène Romieux is a professor of literature in Paris.

Steingrímur Sigfússon is the Minister of Finance and leader of the Left-GreenMovement in Iceland.

Daniel Ankarloo is senior lecturer in social studies and economic history atMalmö College of Higher Learning. He is the author of “Kris i välfärdsfrå-gan” on swedish welfare politics and recently published his second book“Marknadsmyter” about neoliberal free-market myths. He is also a fre-quent contributor to left magazines.

Walter Baier is an economist based in Vienna and coordinator of the trans-form! europe Network.

Gian Franco Benzi is a mathematician who has been in the leadership of theCGIL (Italian General Confederation of Labour) in the school and univer-sity sector. He is now in the CGIL's international sector and in that capac-ity is in close contact with social movements and with the World SocialForum process.

Joachim Bischoff is an economist, co-editor of the journal Sozialismus, an ed-itor at the VSA publishing, and a member of the working group on Alter-native Economic Policy (Memorandum-Gruppe).

Lutz Brangsch is a Senior Research Fellow for economic and social policy atthe Rosa Luxemburg Foundation Institute for Critical Social Analysis.

Alexander Buzgalin is a professor of economics at Moscow State University.

Eric Canepa, a harpsichordist and organist, was director of the SocialistScholars Conference and Left Forum in New York from 2001 to 2006. He isan organiser of North-Atlantic Left Dialogue, and is a co-editor of the Eng-lish edition of transform!, and works with Lavoro Società, the left program-matic area of CGIL.

Dominique Crozat is a member of the board of Espaces Marx (France).

Gaël DeSantis is a journalist for the magazine L’Humanité and a member ofthe national board of the young communist movement of France.

Maryse Dumas is a national secretary of the Confédération générale du travail(General Confederation of Labour, CGT), France.

Elisabeth Gauthier is director of Espaces Marx (France), member of the man-aging board of transform! europe and member of the national committee ofthe PCF.

Jeanine Guepin is Professor Emerita of Biology at the University of Rouenand member of the board of Espaces Marx (France).

List of Contributors

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rs Saskia Sassen is the Robert S. Lynd Professor of Sociology and member of theCommittee on Global Thought, Columbia University (www.columbia.edu/~sjs2/). Her recent books are “Territory, Authority, Rights: From Medievalto Global Assemblages” (Princeton University Press 2008), published inGerman as “Das Paradox des Nationalen” (Suhrkamp 2008) and “A Sociol-ogy of Globalization” (Norton 2007).

Renato Soeiro is a collaborator of the GUE/NGL group, responsible forliaisoning with the Social Forum.

Michalis Spourdalakis teaches political sociology at the University of Athensand is member of the Nicos Poulantzas Institute.

Armando Fernández Steinko teaches Sociology at the Universidad Com-plutense (Madrid, Spain). He has researched on labour and welfare. He iscurrently working on the relations between the criminal and formaleconomies. He is member of Izquierda Unida and associate of the FIM.

Euclid Tsakalotos is currently professor of economics at the Athens Universi-ty of Economics and Business. He has published widely in (mostly) eco-nomics journals in the areas of macroeconomics, political economy andthe institutional determinants of economic performance. His last book(published in Greek) is “The Values and Value of the Left: an Anti-Modern-ization Tract on Society and the Economy”. He is a member of the CentralPolitical Committee of Synaspismos.

Christophe Ventura is a member of Attac France and the association Mémoiredes luttes. He is a co-author of „En finir avec l’eurolibéralisme“ (“Puttingan End to Euroliberalism”), Editions 1001 Nuits, Paris 2008.

Sissy Vovou is an activist of the left, the feminist movement and the alterglobal-ist movement. She is founding member of the Committee of Solidarity forKonstantina Kouneva (17-1-09) Against Work Flexibility and Employers’ Terror.

Patrik Vulkan is a sociology student at Gothenburg University. He is a mem-ber of the group International Socialists and a member of the editorialboard of the IS magazine Gnista.

Francis Wurtz is a French member of the European Parliament, elected in theÎle-de-France constituency on the French Communist Party (PCF) ticket.He is the current president of the European United Left – Nordic GreenLeft group.

Matti Ylönen currently works as policy officer in KEPA, the umbrella organ-isation for Finnish development CSOs. He has been active in Attac Finlandand Tax Justice Network in tax-haven-related campaigns since 2004. Lastyear, he published the first Finnish non-fiction book on tax havens.

AAuussttrriiaa www.transform.or.ate-mail: fleissner@arrakis.es

BBeellggiiuumm Association Culturelle Joseph Jacquemotte*www.acjj.bee-mail: acjj@skynet.beSociety For European Dialogue

CCzzeecchh RReeppuubblliicc Society For European Dialogue*e-mail: malek_j@cbox.cz

FFiinnllaanndd www.vasemmistoofoorumi.fie-mail: ruurik.holm@vasemmistofoorumi.fi

FFrraannccee Espaces Marxwww.Espaces_Marx.orge-mail: Espaces_Marx@internatif.org

Fondation Copernic*www.fondation-copernic.orge-mail: fondation.copernic@ras.eu.org

Fondation Gabriel Peri*www.gabrielperi.fr

GGeerrmmaannyy Journal Sozialismuswww.sozialismus.dee-mail: redaktion@sozialismus.de

Rosa Luxemburg Foundationwww.rosalux.dee-mail: info@rosalux.de

GGrreeeeccee Nicos Poulantzas Institutewww.poulantzas,gre-mail: info@poulantzas.gr

IIttaallyy Transform!italiawww.transform.ite-mail: info@transform.it

LLuuxxeemmbboouurrgg transform! Luxembourg*www.transform.lue-mail: info@transform.lu

NNoorrwwaayy Manifesto Foundation*www.stiftelsenmanifest.noe-mail: manifest@stiftelsenmanifest.no

PPoorrttuuggaall Cooperative Culturas do Trabalho e Socialismo*www.cultra.pt

SSwweeddeenn www.cmsmarx.orge-mail: cms@cmsmarx.org

SSppaaiinn Fundacion des Inverstigaciones Marxistaswww.fim.org.ese-mail:fim@nodo50.org

* observers

transform! european network for alternative thinking and political dialogue www.transform-network.orge-mail: office@transform.or.at

Gußhausstraße 14/31040 Wien, Austria